10-Q 1 orcciii_10q_0331-2022.htm 10-Q 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-56173

 

OWL ROCK CAPITAL CORPORATION III

(Exact name of Registrant as specified in its Charter)

 

Maryland

 

84-4493477

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

399 Park Avenue, 38th Floor, New York, New York

 

10022

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (212) 419-3000

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

None

None

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES NO

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Small reporting company

 

 

 

 

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO

As of May 6, 2022 the registrant had 111,212,207 shares of common stock, $0.01 par value per share, outstanding.

 

 

i

 

Table of Contents

 

 

 

 

 

Page

PART I

 

CONSOLIDATED FINANCIAL INFORMATION

 

 

Item 1.

 

Consolidated Financial Statements

 

2

 

 

Consolidated Statements of Assets and Liabilities as of March 31, 2022 (Unaudited) and December 31, 2021

 

2

 

 

Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

3

 

 

Consolidated Schedules of Investments as of March 31, 2022 (Unaudited) and December 31, 2021

 

4

 

 

Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

43

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

44

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

45

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

70

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

97

Item 4.

 

Controls and Procedures

 

99

 

 

 

 

 

PART II

 

OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

100

Item 1A.

 

Risk Factors

 

100

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

101

Item 3.

 

Defaults Upon Senior Securities

 

101

Item 4.

 

Mine Safety Disclosures

 

101

Item 5.

 

Other Information

 

101

Item 6.

 

Exhibits

 

102

Signatures

 

 

 

103

 

 

ii

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about Owl Rock Capital Corporation III (the “Company,” “we” or “our”), our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

•
an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;
•
an economic downturn could disproportionately impact the companies that we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies;
•
an economic downturn could also impact availability and pricing of our financing and our ability to access the debt and equity capital markets;
•
a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;
•
the impact of the “COVID-19” pandemic and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy, including as a result of recent supply chain disruptions;
•
interest rate volatility, including the decommissioning of LIBOR, could adversely affect our results, particularly because we use leverage as part of our investment strategy;
•
currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;
•
our future operating results;
•
our business prospects and the prospects of our portfolio companies including our and their ability to achieve our respective objectives as a result of the current COVID-19 pandemic;
•
the impact of interest and inflation rates on our business prospects and the prospects of our portfolio companies;
•
our contractual arrangements and relationships with third parties;
•
the ability of our portfolio companies to achieve their objectives;
•
competition with other entities and our affiliates for investment opportunities;
•
the speculative and illiquid nature of our investments;
•
the use of borrowed money to finance a portion of our investments as well as any estimates regarding potential use of leverage;
•
the adequacy of our financing sources and working capital;
•
the loss of key personnel;
•
the timing of cash flows, if any, from the operations of our portfolio companies;
•
the ability of Owl Rock Diversified Advisors LLC (“the Adviser” or “our Adviser”) to locate suitable investments for us and to monitor and administer our investments;
•
the ability of the Adviser to attract and retain highly talented professionals;
•
our ability to maintain our tax treatment as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development company (“BDC”);
•
the effect of legal, tax and regulatory changes, including the Coronavirus Aid, Relief and Economic Security Act signed into law in December 2020 and the American Rescue Plan Act of 2021, signed into law in March 2021;
•
the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflict between Russia and Ukraine; and
•
other risks, uncertainties and other factors previously identified in the reports and other documents we have filed with the Securities and Exchange Commission (“SEC”).

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. Because we are an investment company, the forward-looking statements and projections contained in this report are excluded from the safe harbor protection provided by Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

1

 

PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Owl Rock Capital Corporation III

Consolidated Statements of Assets and Liabilities

(Amounts in thousands, except share and per share amounts)

 

 

 

March 31, 2022 (Unaudited)

 

 

December 31, 2021

 

 

Assets

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments (amortized cost of $2,932,553 and $2,889,829, respectively)

 

$

2,922,855

 

 

$

2,897,037

 

 

Cash

 

 

42,584

 

 

 

27,245

 

 

Interest receivable

 

 

19,876

 

 

 

18,328

 

 

Prepaid expenses and other assets

 

 

1,768

 

 

 

1,825

 

 

Total Assets

 

$

2,987,083

 

 

$

2,944,435

 

 

Liabilities

 

 

 

 

 

 

 

Debt (net of unamortized debt issuance costs of $16,867 and $13,170, respectively)

 

$

1,273,383

 

 

$

1,237,486

 

 

Distribution payable

 

 

36,790

 

 

 

29,725

 

 

Management fee payable

 

 

3,663

 

 

 

2,799

 

 

Payables to affiliates

 

 

750

 

 

 

1,178

 

 

Accrued expenses and other liabilities

 

 

8,931

 

 

 

4,949

 

 

Total Liabilities

 

 

1,323,517

 

 

 

1,276,137

 

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

Net Assets

 

 

 

 

 

 

 

Common shares $0.01 par value, 500,000,000 shares authorized; 111,212,207 and 110,830,108 shares issued and outstanding, respectively

 

 

1,112

 

 

 

1,108

 

 

Additional paid-in-capital

 

 

1,657,163

 

 

 

1,651,416

 

 

Total distributable earnings (losses)

 

 

5,291

 

 

 

15,774

 

 

Total Net Assets

 

 

1,663,566

 

 

 

1,668,298

 

 

Total Liabilities and Net Assets

 

$

2,987,083

 

 

$

2,944,435

 

 

Net Asset Value Per Share

 

$

14.96

 

 

$

15.05

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

2

 

Owl Rock Capital Corporation III

Consolidated Statements of Operations

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

 

2022

 

 

2021

 

 

Investment Income

 

 

 

 

 

 

 

Investment income from non-controlled, non-affiliated investments:

 

 

 

 

 

 

 

Interest income (excluding payment-in-kind (“PIK”) interest income)

 

$

46,499

 

 

$

8,975

 

 

PIK interest income

 

 

6,629

 

 

 

913

 

 

Other income

 

 

3,127

 

 

 

289

 

 

Total investment income from non-controlled, non-affiliated investments

 

 

56,255

 

 

 

10,177

 

 

Total Investment Income

 

 

56,255

 

 

 

10,177

 

 

Expenses

 

 

 

 

 

 

 

Interest expense

 

 

9,340

 

 

 

1,432

 

 

Management fee

 

 

3,663

 

 

 

543

 

 

Professional fees

 

 

999

 

 

 

511

 

 

Directors' fees

 

 

311

 

 

 

256

 

 

Other general and administrative

 

 

599

 

 

 

362

 

 

Total Expenses

 

 

14,912

 

 

 

3,104

 

 

Net Investment Income (Loss) Before Taxes

 

 

41,343

 

 

 

7,073

 

 

Excise tax expense (benefit)

 

 

413

 

 

 

33

 

 

Net Investment Income (Loss) After Taxes

 

$

40,930

 

 

$

7,040

 

 

Net Realized and Change in Unrealized Gain (Loss)

 

 

 

 

 

 

 

Net change in unrealized gain (loss):

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(15,500

)

 

 

1,784

 

 

Translation of assets and liabilities in foreign currencies

 

 

(7

)

 

 

(221

)

 

Total Net Change in Unrealized Gain (Loss)

 

 

(15,507

)

 

 

1,563

 

 

Net realized gain (loss):

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

869

 

 

 

22

 

 

Foreign currency transactions

 

 

15

 

 

 

193

 

 

Total Net Realized Gain (Loss)

 

 

884

 

 

 

215

 

 

Total Net Realized and Change in Unrealized Gain (Loss)

 

 

(14,623

)

 

 

1,778

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

$

26,307

 

 

$

8,818

 

 

Earnings Per Share - Basic and Diluted

 

$

0.24

 

 

$

0.44

 

 

Weighted Average Shares Outstanding - Basic and Diluted

 

 

111,084,841

 

 

 

19,879,496

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

 

 

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Non-controlled/non-affiliated portfolio company investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and media

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Music Rights, LLC(5)(7)(21)

 

First lien senior secured loan

 

L + 5.75%

 

8/28/2028

 

$

84,164

 

 

$

82,595

 

 

$

82,480

 

 

 

5.0

 

%

Global Music Rights, LLC(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

8/27/2027

 

 

-

 

 

 

(135

)

 

 

(150

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

84,164

 

 

 

82,460

 

 

 

82,330

 

 

 

5.0

 

%

Aerospace and defense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peraton Corp.(5)(6)(20)(21)

 

Second lien senior secured loan

 

L + 7.75%

 

2/1/2029

 

 

14,562

 

 

 

14,365

 

 

 

14,421

 

 

 

0.9

 

%

 

 

 

 

 

 

 

 

 

14,562

 

 

 

14,365

 

 

 

14,421

 

 

 

0.9

 

%

Buildings and real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Associations, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.50% (incl. 2.50% PIK)

 

7/2/2027

 

 

81,032

 

 

 

79,976

 

 

 

80,020

 

 

 

4.8

 

%

Associations, Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.50%

 

7/2/2027

 

 

-

 

 

 

(62

)

 

 

(66

)

 

 

—

 

%

RealPage, Inc.(5)(6)(20)(21)

 

Second lien senior secured loan

 

L + 6.50%

 

4/23/2029

 

 

6,500

 

 

 

6,411

 

 

 

6,508

 

 

 

0.4

 

%

 

 

 

 

 

 

 

 

 

87,532

 

 

 

86,325

 

 

 

86,462

 

 

 

5.2

 

%

 

 

 

4

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Business services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denali Buyerco LLC (dba Summit Companies)(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

9/15/2028

 

 

52,133

 

 

 

51,650

 

 

 

51,352

 

 

 

3.2

 

%

Denali Buyerco LLC (dba Summit Companies)(5)(7)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

9/15/2023

 

 

3,417

 

 

 

3,311

 

 

 

3,281

 

 

 

0.2

 

%

Denali Buyerco LLC (dba Summit Companies)(5)(7)(16)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

9/15/2027

 

 

1,621

 

 

 

1,566

 

 

 

1,530

 

 

 

0.1

 

%

Diamondback Acquisition, Inc. (dba Sphera)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

9/13/2028

 

 

47,708

 

 

 

46,813

 

 

 

46,515

 

 

 

2.8

 

%

Diamondback Acquisition, Inc. (dba Sphera)(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

9/13/2023

 

 

-

 

 

 

(88

)

 

 

(143

)

 

 

—

 

%

Gainsight, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.75% PIK

 

7/30/2027

 

 

5,077

 

 

 

4,997

 

 

 

4,988

 

 

 

0.3

 

%

Gainsight, Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

7/30/2027

 

 

-

 

 

 

(14

)

 

 

(15

)

 

 

—

 

%

Hercules Borrower, LLC (dba The Vincit Group)(5)(7)(21)

 

First lien senior secured loan

 

L + 6.50%

 

12/15/2026

 

 

36,625

 

 

 

36,174

 

 

 

36,625

 

 

 

2.3

 

%

Hercules Borrower, LLC (dba The Vincit Group)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

12/15/2026

 

 

403

 

 

 

400

 

 

 

397

 

 

 

—

 

%

Hercules Borrower, LLC (dba The Vincit Group)(5)(7)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

9/10/2023

 

 

1,508

 

 

 

1,493

 

 

 

1,474

 

 

 

0.1

 

%

Hercules Borrower, LLC (dba The Vincit Group)(5)(7)(16)(21)

 

First lien senior secured revolving loan

 

L + 6.50%

 

12/15/2026

 

 

458

 

 

 

408

 

 

 

458

 

 

 

—

 

%

Hercules Buyer, LLC (dba The Vincit Group)(21)(22)(25)

 

Unsecured notes

 

0.48% PIK

 

12/14/2029

 

 

1,056

 

 

 

1,056

 

 

 

1,056

 

 

 

—

 

%

KPSKY Acquisition, Inc. (dba BluSky)(5)(6)(21)

 

First lien senior secured loan

 

L + 5.50%

 

10/19/2028

 

 

35,718

 

 

 

35,040

 

 

 

34,825

 

 

 

2.1

 

%

KPSKY Acquisition, Inc. (dba BluSky)(5)(9)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

P + 4.50%

 

10/19/2023

 

 

2,041

 

 

 

1,983

 

 

 

1,959

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

187,765

 

 

 

184,789

 

 

 

184,302

 

 

 

11.2

 

%

 

 

 

5

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Chemicals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aruba Investments Holdings, LLC (dba Angus Chemical Company)(5)(7)(21)

 

Second lien senior secured loan

 

L + 7.75%

 

11/24/2028

 

 

6,500

 

 

 

6,416

 

 

 

6,484

 

 

 

0.4

 

%

Gaylord Chemical Company, L.L.C.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.50%

 

3/30/2027

 

 

70,792

 

 

 

70,148

 

 

 

70,261

 

 

 

4.2

 

%

Gaylord Chemical Company, L.L.C.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.50%

 

3/30/2026

 

 

-

 

 

 

(34

)

 

 

(30

)

 

 

—

 

%

Velocity HoldCo III Inc. (dba VelocityEHS)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.75%

 

4/22/2027

 

 

6,086

 

 

 

5,967

 

 

 

5,949

 

 

 

0.4

 

%

Velocity HoldCo III Inc. (dba VelocityEHS)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

4/22/2026

 

 

-

 

 

 

(7

)

 

 

(8

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

83,378

 

 

 

82,490

 

 

 

82,656

 

 

 

5.0

 

%

Consumer products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ConAir Holdings LLC(5)(7)(21)

 

Second lien senior secured loan

 

L + 7.50%

 

5/17/2029

 

 

45,000

 

 

 

44,329

 

 

 

44,663

 

 

 

2.7

 

%

Foundation Consumer Brands, LLC(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

2/12/2027

 

 

4,000

 

 

 

4,001

 

 

 

4,000

 

 

 

0.2

 

%

Lignetics Investment Corp.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

11/1/2027

 

 

50,853

 

 

 

50,254

 

 

 

49,709

 

 

 

3.0

 

%

Lignetics Investment Corp.(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

11/1/2023

 

 

-

 

 

 

(74

)

 

 

(143

)

 

 

—

 

%

Lignetics Investment Corp.(5)(7)(16)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/2/2026

 

 

2,167

 

 

 

2,079

 

 

 

1,995

 

 

 

0.1

 

%

SWK BUYER, Inc. (dba Stonewall Kitchen)(5)(11)(21)

 

First lien senior secured loan

 

SR + 5.25%

 

3/12/2029

 

 

754

 

 

 

740

 

 

 

739

 

 

 

—

 

%

SWK BUYER, Inc. (dba Stonewall Kitchen)(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

SR + 5.25%

 

3/11/2024

 

 

-

 

 

 

(2

)

 

 

(2

)

 

 

—

 

%

SWK BUYER, Inc. (dba Stonewall Kitchen)(5)(9)(16)(21)

 

First lien senior secured revolving loan

 

P + 4.25%

 

3/12/2029

 

 

7

 

 

 

6

 

 

 

6

 

 

 

—

 

%

Vermont Aus Pty Ltd(5)(10)(19)(21)

 

First lien senior secured loan

 

SR + 5.50%

 

3/22/2028

 

 

1,000

 

 

 

975

 

 

 

975

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

103,781

 

 

 

102,308

 

 

 

101,942

 

 

 

6.1

 

%

 

 

 

6

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Containers and packaging

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ascend Buyer, LLC (dba PPC Flexible Packaging)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.75%

 

10/2/2028

 

 

50,080

 

 

 

49,608

 

 

 

49,328

 

 

 

3.0

 

%

Ascend Buyer, LLC (dba PPC Flexible Packaging)(5)(6)(16)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

9/30/2027

 

 

851

 

 

 

804

 

 

 

773

 

 

 

—

 

%

Fortis Solutions Group, LLC(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

10/13/2028

 

 

22,612

 

 

 

22,191

 

 

 

22,046

 

 

 

1.3

 

%

Fortis Solutions Group, LLC(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

10/13/2023

 

 

-

 

 

 

(86

)

 

 

(139

)

 

 

—

 

%

Fortis Solutions Group, LLC(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.50%

 

10/15/2027

 

 

-

 

 

 

(58

)

 

 

(80

)

 

 

—

 

%

Pregis Topco LLC(5)(6)(21)

 

Second lien senior secured loan

 

L + 6.75%

 

8/1/2029

 

 

30,000

 

 

 

30,000

 

 

 

29,700

 

 

 

1.8

 

%

Pregis Topco LLC(5)(6)(21)

 

Second lien senior secured loan

 

L + 8.00%

 

8/1/2029

 

 

2,500

 

 

 

2,500

 

 

 

2,494

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

106,043

 

 

 

104,959

 

 

 

104,122

 

 

 

6.2

 

%

Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABB/Con-cise Optical Group LLC(5)(8)(21)

 

First lien senior secured loan

 

L + 7.50%

 

2/23/2028

 

 

906

 

 

 

892

 

 

 

892

 

 

 

0.1

 

%

ABB/Con-cise Optical Group LLC(5)(9)(16)(21)

 

First lien senior secured revolving loan

 

P + 6.50%

 

2/23/2028

 

 

35

 

 

 

34

 

 

 

33

 

 

 

—

 

%

Individual Foodservice Holdings, LLC(5)(8)(21)

 

First lien senior secured loan

 

L + 6.25%

 

11/21/2025

 

 

58,722

 

 

 

58,084

 

 

 

58,282

 

 

 

3.5

 

%

Individual Foodservice Holdings, LLC(5)(6)(16)(21)

 

First lien senior secured revolving loan

 

L + 6.25%

 

11/22/2024

 

 

444

 

 

 

419

 

 

 

425

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

60,107

 

 

 

59,429

 

 

 

59,632

 

 

 

3.6

 

%

 

 

 

7

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pluralsight, LLC(5)(8)(21)

 

First lien senior secured loan

 

L + 8.00%

 

4/6/2027

 

 

20,641

 

 

 

20,450

 

 

 

20,383

 

 

 

1.2

 

%

Pluralsight, LLC(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 8.00%

 

4/6/2027

 

 

-

 

 

 

(11

)

 

 

(16

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

20,641

 

 

 

20,439

 

 

 

20,367

 

 

 

1.2

 

%

Financial services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AxiomSL Group, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

12/3/2027

 

 

45,873

 

 

 

45,392

 

 

 

45,184

 

 

 

2.7

 

%

AxiomSL Group, Inc.(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

7/21/2023

 

 

-

 

 

 

(8

)

 

 

(9

)

 

 

—

 

%

AxiomSL Group, Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

12/3/2025

 

 

-

 

 

 

(39

)

 

 

(60

)

 

 

—

 

%

Hg Genesis 8 Sumoco Limited(5)(12)(19)(21)

 

Unsecured facility

 

SA + 7.50% PIK

 

8/28/2025

 

 

19,640

 

 

 

19,744

 

 

 

19,591

 

 

 

1.2

 

%

Hg Genesis 9 Sumoco Limited(5)(14)(19)(21)

 

Unsecured facility

 

E + 7.00% PIK

 

3/10/2027

 

 

1,001

 

 

 

988

 

 

 

993

 

 

 

0.1

 

%

Hg Saturn LuchaCo Limited(5)(13)(19)(21)

 

Unsecured facility

 

G + 7.50% PIK

 

3/30/2026

 

 

25,639

 

 

 

26,672

 

 

 

25,319

 

 

 

1.5

 

%

Muine Gall, LLC(5)(8)(19)(21)(27)

 

First lien senior secured loan

 

L + 7.00% PIK

 

9/20/2024

 

 

81,667

 

 

 

81,879

 

 

 

81,462

 

 

 

4.9

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(5)(6)(21)

 

First lien senior secured loan

 

L + 5.75%

 

9/8/2025

 

 

8,538

 

 

 

8,462

 

 

 

8,432

 

 

 

0.5

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(5)(6)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

10/2/2023

 

 

1,676

 

 

 

1,644

 

 

 

1,648

 

 

 

0.1

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

9/8/2025

 

 

-

 

 

 

(7

)

 

 

(7

)

 

 

—

 

%

Smarsh Inc.(5)(10)(21)

 

First lien senior secured loan

 

SR + 6.50%

 

2/16/2029

 

 

762

 

 

 

754

 

 

 

754

 

 

 

—

 

%

Smarsh Inc.(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

SR + 6.50%

 

2/19/2024

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

—

 

%

Smarsh Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

SR + 6.50%

 

2/16/2029

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

184,796

 

 

 

185,480

 

 

 

183,307

 

 

 

11.0

 

%

 

 

 

8

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balrog Acquisition, Inc. (dba BakeMark)(5)(7)(21)

 

Second lien senior secured loan

 

L + 7.00%

 

9/3/2029

 

 

6,000

 

 

 

5,952

 

 

 

5,925

 

 

 

0.4

 

%

BP Veraison Buyer, LLC (dba Sun World)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.75%

 

5/12/2027

 

 

35,408

 

 

 

35,026

 

 

 

34,877

 

 

 

2.1

 

%

BP Veraison Buyer, LLC (dba Sun World)(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

5/12/2023

 

 

-

 

 

 

(16

)

 

 

(56

)

 

 

—

 

%

BP Veraison Buyer, LLC (dba Sun World)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

5/12/2027

 

 

-

 

 

 

(48

)

 

 

(67

)

 

 

—

 

%

CFS Brands, LLC(5)(6)(21)

 

First lien senior secured loan

 

L + 3.00%

 

3/20/2025

 

 

1,933

 

 

 

1,867

 

 

 

1,865

 

 

 

0.1

 

%

CFS Brands, LLC(5)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 3.00%

 

12/2/2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)(5)(11)(21)

 

First lien senior secured loan

 

SR + 6.00%

 

3/11/2027

 

 

22,200

 

 

 

21,870

 

 

 

21,867

 

 

 

1.3

 

%

Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)(5)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

SR + 6.00%

 

5/16/2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)(5)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

SR + 6.00%

 

9/30/2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

KBP Brands, LLC(5)(6)(21)

 

First lien senior secured loan

 

L + 5.00%

 

5/26/2027

 

 

287

 

 

 

283

 

 

 

283

 

 

 

—

 

%

KBP Brands, LLC(5)(6)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.00%

 

12/22/2023

 

 

638

 

 

 

629

 

 

 

629

 

 

 

—

 

%

Nutraceutical International Corporation(5)(6)(21)

 

First lien senior secured loan

 

L + 7.00%

 

9/30/2026

 

 

11,397

 

 

 

11,262

 

 

 

11,083

 

 

 

0.7

 

%

Nutraceutical International Corporation(5)(6)(21)

 

First lien senior secured revolving loan

 

L + 7.00%

 

9/30/2025

 

 

735

 

 

 

728

 

 

 

715

 

 

 

—

 

%

Shearer's Foods, LLC(5)(6)(21)

 

Second lien senior secured loan

 

L + 7.75%

 

9/22/2028

 

 

30,000

 

 

 

29,742

 

 

 

29,850

 

 

 

1.8

 

%

Ultimate Baked Goods Midco, LLC(5)(7)(21)

 

First lien senior secured loan

 

L + 6.25%

 

8/13/2027

 

 

16,459

 

 

 

16,083

 

 

 

15,965

 

 

 

1.0

 

%

Ultimate Baked Goods Midco, LLC(5)(8)(16)(21)

 

First lien senior secured revolving loan

 

L + 6.25%

 

8/13/2027

 

 

1,250

 

 

 

1,205

 

 

 

1,190

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

126,307

 

 

 

124,583

 

 

 

124,126

 

 

 

7.5

 

%

 

 

 

9

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Healthcare equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Confluent Medical Technologies, Inc.(5)(10)(21)

 

Second lien senior secured loan

 

SR + 6.50%

 

2/18/2030

 

 

1,000

 

 

 

980

 

 

 

980

 

 

 

0.1

 

%

CSC MKG Topco LLC. (dba Medical Knowledge Group)(5)(6)(21)

 

First lien senior secured loan

 

L + 5.75%

 

2/1/2029

 

 

854

 

 

 

837

 

 

 

837

 

 

 

0.1

 

%

CSC MKG Topco LLC. (dba Medical Knowledge Group)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

2/1/2029

 

 

-

 

 

 

(2

)

 

 

(2

)

 

 

—

 

%

Medline Borrower, LP(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 3.25%

 

10/21/2026

 

 

-

 

 

 

(38

)

 

 

(55

)

 

 

—

 

%

Packaging Coordinators Midco, Inc.(5)(7)(21)

 

Second lien senior secured loan

 

L + 7.00%

 

12/13/2029

 

 

54,269

 

 

 

53,074

 

 

 

52,912

 

 

 

3.2

 

%

Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.)(5)(6)(21)

 

First lien senior secured loan

 

L + 6.75%

 

1/31/2028

 

 

38,317

 

 

 

37,754

 

 

 

37,742

 

 

 

2.3

 

%

Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.75%

 

1/29/2026

 

 

-

 

 

 

(42

)

 

 

(40

)

 

 

—

 

%

Rhea Parent, Inc.(5)(10)(21)

 

First lien senior secured loan

 

SR + 5.75%

 

2/19/2029

 

 

774

 

 

 

759

 

 

 

758

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

95,214

 

 

 

93,322

 

 

 

93,132

 

 

 

5.7

 

%

Healthcare providers and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diagnostic Services Holdings, Inc. (dba Rayus Radiology)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

3/17/2025

 

 

2,499

 

 

 

2,499

 

 

 

2,499

 

 

 

0.2

 

%

Ex Vivo Parent Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 9.50% PIK

 

9/27/2028

 

 

26,145

 

 

 

25,649

 

 

 

25,557

 

 

 

1.5

 

%

National Dentex Labs LLC (fka Barracuda Dental LLC)(5)(7)(21)

 

First lien senior secured loan

 

L + 7.00%

 

10/27/2025

 

 

11,757

 

 

 

11,601

 

 

 

11,552

 

 

 

0.7

 

%

National Dentex Labs LLC (fka Barracuda Dental LLC)(5)(7)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 7.00%

 

3/31/2022

 

 

5,915

 

 

 

5,851

 

 

 

5,809

 

 

 

0.3

 

%

National Dentex Labs LLC (fka Barracuda Dental LLC)(5)(7)(16)(21)

 

First lien senior secured revolving loan

 

L + 7.00%

 

10/27/2025

 

 

1,132

 

 

 

1,102

 

 

 

1,104

 

 

 

0.1

 

%

 

 

 

10

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Natural Partners, LLC(5)(6)(19)(21)

 

First lien senior secured loan

 

L + 6.00%

 

11/29/2027

 

 

2,328

 

 

 

2,283

 

 

 

2,282

 

 

 

0.1

 

%

Natural Partners, LLC(5)(16)(17)(19)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/29/2027

 

 

-

 

 

 

(3

)

 

 

(3

)

 

 

—

 

%

OB Hospitalist Group, Inc.(5)(6)(21)

 

First lien senior secured loan

 

L + 5.50%

 

9/27/2027

 

 

52,716

 

 

 

51,737

 

 

 

51,399

 

 

 

3.1

 

%

OB Hospitalist Group, Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.50%

 

9/27/2027

 

 

-

 

 

 

(125

)

 

 

(171

)

 

 

—

 

%

Parexel International, Inc. (dba Parexel)(5)(6)(21)

 

Second lien senior secured loan

 

L + 6.50%

 

11/15/2029

 

 

85,000

 

 

 

84,181

 

 

 

83,725

 

 

 

5.0

 

%

Quva Pharma, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

4/12/2028

 

 

11,759

 

 

 

11,446

 

 

 

11,377

 

 

 

0.7

 

%

Quva Pharma, Inc.(5)(8)(16)(21)

 

First lien senior secured revolving loan

 

L + 5.50%

 

4/10/2026

 

 

331

 

 

 

302

 

 

 

293

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

199,582

 

 

 

196,523

 

 

 

195,423

 

 

 

11.7

 

%

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BCPE Osprey Buyer, Inc. (dba PartsSource)(5)(8)(21)

 

First lien senior secured loan

 

L + 5.75%

 

8/23/2028

 

 

54,175

 

 

 

53,370

 

 

 

53,091

 

 

 

3.2

 

%

BCPE Osprey Buyer, Inc. (dba PartsSource)(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

8/23/2023

 

 

-

 

 

 

(69

)

 

 

(117

)

 

 

—

 

%

BCPE Osprey Buyer, Inc. (dba PartsSource)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

8/21/2026

 

 

-

 

 

 

(86

)

 

 

(113

)

 

 

—

 

%

Datix Bidco Limited (dba RLDatix)(5)(13)(19)(21)

 

First lien senior secured loan

 

G + 4.50%

 

4/27/2025

 

 

420

 

 

 

431

 

 

 

410

 

 

 

—

 

%

Datix Bidco Limited (dba RLDatix)(5)(13)(19)(21)

 

Second lien senior secured loan

 

G + 7.75%

 

4/27/2026

 

 

2,194

 

 

 

2,251

 

 

 

2,150

 

 

 

0.1

 

%

GI Ranger Intermediate, LLC (dba Rectangle Health)(5)(10)(21)

 

First lien senior secured loan

 

SR + 6.00%

 

10/30/2028

 

 

20,974

 

 

 

20,574

 

 

 

20,502

 

 

 

1.2

 

%

GI Ranger Intermediate, LLC (dba Rectangle Health)(5)(10)(16)(21)

 

First lien senior secured revolving loan

 

SR + 6.00%

 

10/29/2027

 

 

167

 

 

 

136

 

 

 

130

 

 

 

—

 

%

 

 

 

11

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Inovalon Holdings, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.25% (incl. 2.75% PIK)

 

11/24/2028

 

 

50,886

 

 

 

49,673

 

 

 

49,487

 

 

 

3.0

 

%

Inovalon Holdings, Inc.(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

5/24/2024

 

 

-

 

 

 

(64

)

 

 

(81

)

 

 

—

 

%

Inovalon Holdings, Inc.(5)(7)(21)

 

Second lien senior secured loan

 

L + 10.50% PIK

 

11/24/2033

 

 

24,763

 

 

 

24,288

 

 

 

24,205

 

 

 

1.5

 

%

Intelerad Medical Systems Incorporated(5)(7)(19)(21)

 

First lien senior secured loan

 

L + 6.25%

 

8/21/2026

 

 

42,695

 

 

 

42,203

 

 

 

42,481

 

 

 

2.6

 

%

Intelerad Medical Systems Incorporated(5)(7)(16)(19)(21)

 

First lien senior secured revolving loan

 

L + 6.25%

 

8/21/2026

 

 

1,104

 

 

 

1,104

 

 

 

1,095

 

 

 

0.1

 

%

Interoperability Bidco, Inc. (dba Lyniate)(5)(7)(21)

 

First lien senior secured loan

 

L + 6.25%

 

12/24/2026

 

 

4,783

 

 

 

4,752

 

 

 

4,752

 

 

 

0.3

 

%

Interoperability Bidco, Inc. (dba Lyniate)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.25%

 

12/26/2024

 

 

-

 

 

 

(1

)

 

 

(1

)

 

 

—

 

%

RL Datix Holdings (USA), Inc.(5)(8)(19)(21)

 

First lien senior secured loan

 

L + 5.00%

 

4/28/2025

 

 

5,000

 

 

 

4,909

 

 

 

4,888

 

 

 

0.3

 

%

RL Datix Holdings (USA), Inc.(5)(8)(19)(21)

 

Second lien senior secured loan

 

L + 8.50%

 

4/27/2026

 

 

5,000

 

 

 

4,902

 

 

 

4,900

 

 

 

0.3

 

%

 

 

 

 

 

 

 

 

 

212,161

 

 

 

208,373

 

 

 

207,779

 

 

 

12.6

 

%

Household products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walker Edison Furniture Company LLC(5)(7)(21)

 

First lien senior secured loan

 

L + 8.75% (incl. 3.00% PIK)

 

3/31/2027

 

 

25,110

 

 

 

25,110

 

 

 

22,850

 

 

 

1.4

 

%

 

 

 

 

 

 

 

 

 

25,110

 

 

 

25,110

 

 

 

22,850

 

 

 

1.4

 

%

 

 

 

12

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Human resource support services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cornerstone OnDemand, Inc.(5)(6)(21)

 

Second lien senior secured loan

 

L + 6.50%

 

10/15/2029

 

 

44,583

 

 

 

43,943

 

 

 

43,692

 

 

 

2.6

 

%

IG Investments Holdings, LLC (dba Insight Global)(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

9/22/2028

 

 

69,233

 

 

 

67,934

 

 

 

67,848

 

 

 

4.1

 

%

IG Investments Holdings, LLC (dba Insight Global)(5)(9)(16)(21)

 

First lien senior secured revolving loan

 

P + 5.00%

 

9/22/2027

 

 

1,084

 

 

 

985

 

 

 

975

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

114,900

 

 

 

112,862

 

 

 

112,515

 

 

 

6.8

 

%

Infrastructure and environmental services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tamarack Intermediate, L.L.C. (dba Verisk 3E)(5)(10)(21)

 

First lien senior secured loan

 

SR + 5.75%

 

3/13/2028

 

 

685

 

 

 

672

 

 

 

671

 

 

 

—

 

%

Tamarack Intermediate, L.L.C. (dba Verisk 3E)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

SR + 5.75%

 

3/13/2028

 

 

-

 

 

 

(2

)

 

 

(2

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

685

 

 

 

670

 

 

 

669

 

 

 

—

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alera Group, Inc.(5)(6)(21)

 

First lien senior secured loan

 

L + 5.50%

 

10/2/2028

 

 

69,740

 

 

 

68,262

 

 

 

67,822

 

 

 

4.1

 

%

Alera Group, Inc.(5)(6)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

10/2/2023

 

 

19,139

 

 

 

18,725

 

 

 

18,601

 

 

 

1.1

 

%

Ardonagh Midco 2 Plc(19)(21)(25)

 

Unsecured notes

 

11.50%

 

1/15/2027

 

 

241

 

 

 

239

 

 

 

255

 

 

 

—

 

%

Ardonagh Midco 3 Plc(5)(12)(19)(21)

 

First lien senior secured loan

 

SA + 7.00%

 

7/14/2026

 

 

2,454

 

 

 

2,297

 

 

 

2,454

 

 

 

0.1

 

%

Ardonagh Midco 3 Plc(5)(15)(19)(21)

 

First lien senior secured loan

 

E + 7.00%

 

7/14/2026

 

 

219

 

 

 

216

 

 

 

218

 

 

 

—

 

%

Ardonagh Midco 3 Plc(5)(8)(19)(21)

 

First lien senior secured loan

 

L + 5.75%

 

7/14/2026

 

 

576

 

 

 

566

 

 

 

572

 

 

 

—

 

%

Ardonagh Midco 3 Plc(5)(16)(17)(18)(19)(21)

 

First lien senior secured delayed draw term loan

 

SA + 5.75%

 

8/19/2023

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

—

 

%

 

 

 

13

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Asurion, LLC(5)(6)(20)(21)

 

Second lien senior secured loan

 

L + 5.25%

 

1/31/2028

 

 

5,000

 

 

 

5,000

 

 

 

4,895

 

 

 

0.3

 

%

Asurion, LLC(5)(6)(20)(21)

 

Second lien senior secured loan

 

L + 5.25%

 

1/22/2029

 

 

15,000

 

 

 

14,861

 

 

 

14,645

 

 

 

0.9

 

%

Brightway Holdings, LLC(5)(6)(21)

 

First lien senior secured loan

 

L + 6.50%

 

12/16/2027

 

 

17,895

 

 

 

17,680

 

 

 

17,626

 

 

 

1.1

 

%

Brightway Holdings, LLC(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.50%

 

12/16/2027

 

 

—

 

 

 

(25

)

 

 

(32

)

 

 

—

 

%

Evolution BuyerCo, Inc. (dba SIAA)(5)(7)(21)

 

First lien senior secured loan

 

L + 6.25%

 

4/28/2028

 

 

29,730

 

 

 

29,348

 

 

 

29,283

 

 

 

1.8

 

%

Evolution BuyerCo, Inc. (dbaSIAA)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.25%

 

4/30/2027

 

 

—

 

 

 

(27

)

 

 

(33

)

 

 

—

 

%

KUSRP Intermediate, Inc. (dba U.S. Retirement and Benefits Partners)(5)(7)(21)

 

First lien senior secured loan

 

L + 9.50% PIK

 

7/24/2028

 

 

12,557

 

 

 

12,328

 

 

 

12,306

 

 

 

0.7

 

%

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

11/1/2028

 

 

34,237

 

 

 

33,912

 

 

 

33,723

 

 

 

2.0

 

%

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/1/2027

 

 

—

 

 

 

(14

)

 

 

(23

)

 

 

—

 

%

PCF Midco II, LLC (dba PCF Insurance Services)(21)(25)

 

First lien senior secured loan

 

9.00% PIK

 

10/31/2031

 

 

33,349

 

 

 

30,371

 

 

 

29,764

 

 

 

1.8

 

%

TEMPO BUYER CORP. (dba Global Claims Services)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

8/28/2028

 

 

36,433

 

 

 

35,754

 

 

 

35,522

 

 

 

2.1

 

%

TEMPO BUYER CORP. (dba Global Claims Services)(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

8/26/2023

 

 

-

 

 

 

(94

)

 

 

(155

)

 

 

—

 

%

TEMPO BUYER CORP. (dba Global Claims Services)(5)(9)(16)(21)

 

First lien senior secured revolving loan

 

P + 4.50%

 

8/26/2027

 

 

206

 

 

 

113

 

 

 

77

 

 

 

—

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

7/23/2027

 

 

15,017

 

 

 

14,745

 

 

 

14,642

 

 

 

0.9

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(5)(7)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.50%

 

7/23/2027

 

 

18

 

 

 

(1

)

 

 

(9

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

291,811

 

 

 

284,256

 

 

 

282,151

 

 

 

16.9

 

%

 

 

 

14

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bayshore Intermediate #2, L.P. (dba Boomi)(5)(7)(21)

 

First lien senior secured loan

 

L + 7.75% PIK

 

10/2/2028

 

 

19,549

 

 

 

19,142

 

 

 

19,061

 

 

 

1.1

 

%

Bayshore Intermediate #2, L.P. (dba Boomi)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.75%

 

10/1/2027

 

 

-

 

 

 

(33

)

 

 

(40

)

 

 

—

 

%

BCPE Nucleon (DE) SPV, LP(5)(8)(21)

 

First lien senior secured loan

 

L + 7.00%

 

9/24/2026

 

 

40,000

 

 

 

39,511

 

 

 

39,700

 

 

 

2.4

 

%

BCTO BSI Buyer, Inc. (dba Buildertrend)(5)(7)(21)

 

First lien senior secured loan

 

L + 7.00%

 

12/23/2026

 

 

8,482

 

 

 

8,412

 

 

 

8,419

 

 

 

0.5

 

%

BCTO BSI Buyer, Inc. (dba Buildertrend)(5)(7)(16)(21)

 

First lien senior secured revolving loan

 

L + 7.00%

 

12/23/2026

 

 

573

 

 

 

565

 

 

 

566

 

 

 

—

 

%

CivicPlus, LLC(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

8/24/2027

 

 

9,387

 

 

 

9,301

 

 

 

9,246

 

 

 

0.6

 

%

CivicPlus, LLC(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

8/24/2023

 

 

-

 

 

 

-

 

 

 

(22

)

 

 

—

 

%

CivicPlus, LLC(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

8/24/2027

 

 

-

 

 

 

(8

)

 

 

(13

)

 

 

—

 

%

EET Buyer, Inc. (dba e-Emphasys)(5)(8)(21)

 

First lien senior secured loan

 

L + 5.75%

 

11/8/2027

 

 

19,545

 

 

 

19,361

 

 

 

19,252

 

 

 

1.2

 

%

EET Buyer, Inc. (dba e-Emphasys)(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

11/8/2027

 

 

-

 

 

 

(18

)

 

 

(29

)

 

 

—

 

%

Forescout Technologies, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 9.50% (incl. 9.50% PIK)

 

8/17/2026

 

 

40,783

 

 

 

40,334

 

 

 

40,783

 

 

 

2.5

 

%

Forescout Technologies, Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 8.50%

 

8/18/2025

 

 

-

 

 

 

(27

)

 

 

-

 

 

 

—

 

%

GovBrands Intermediate, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

8/4/2027

 

 

8,325

 

 

 

8,136

 

 

 

8,034

 

 

 

0.5

 

%

GovBrands Intermediate, Inc.(5)(7)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

8/4/2023

 

 

1,873

 

 

 

1,820

 

 

 

1,788

 

 

 

0.1

 

%

GovBrands Intermediate, Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.50%

 

8/4/2027

 

 

-

 

 

 

(20

)

 

 

(31

)

 

 

—

 

%

 

 

 

15

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Granicus, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.50%

 

1/29/2027

 

 

13,461

 

 

 

13,191

 

 

 

13,159

 

 

 

0.8

 

%

Granicus, Inc.(5)(7)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

4/23/2023

 

 

1,531

 

 

 

1,496

 

 

 

1,484

 

 

 

0.1

 

%

Granicus, Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.50%

 

1/29/2027

 

 

-

 

 

 

(23

)

 

 

(27

)

 

 

—

 

%

GS Acquisitionco, Inc. (dba insightsoftware)(5)(8)(21)

 

First lien senior secured loan

 

L + 5.75%

 

5/25/2026

 

 

5,790

 

 

 

5,763

 

 

 

5,732

 

 

 

0.3

 

%

GS Acquisitionco, Inc. (dba insightsoftware)(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

11/2/2022

 

 

-

 

 

 

(12

)

 

 

(38

)

 

 

—

 

%

Hyland Software, Inc.(5)(6)(21)

 

Second lien senior secured loan

 

L + 6.25%

 

7/7/2025

 

 

6,000

 

 

 

5,998

 

 

 

5,940

 

 

 

0.4

 

%

MessageBird BidCo B.V.(5)(8)(19)(21)

 

First lien senior secured loan

 

L + 6.75%

 

5/5/2027

 

 

16,000

 

 

 

15,689

 

 

 

15,640

 

 

 

0.9

 

%

Ministry Brands Holdings, LLC. (5)(7)(21)

 

First lien senior secured loan

 

L + 5.50%

 

12/29/2028

 

 

10,505

 

 

 

10,301

 

 

 

10,242

 

 

 

0.6

 

%

Ministry Brands Holdings, LLC. (5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

12/29/2023

 

 

-

 

 

 

(32

)

 

 

(50

)

 

 

—

 

%

Ministry Brands Holdings, LLC. (5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.50%

 

12/30/2027

 

 

-

 

 

 

(19

)

 

 

(25

)

 

 

—

 

%

Proofpoint, Inc.(5)(7)(20)(21)

 

Second lien senior secured loan

 

L + 6.25%

 

8/31/2029

 

 

7,500

 

 

 

7,465

 

 

 

7,456

 

 

 

0.4

 

%

QAD Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

11/5/2027

 

 

46,500

 

 

 

45,622

 

 

 

45,338

 

 

 

2.7

 

%

QAD Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/5/2027

 

 

-

 

 

 

(112

)

 

 

(150

)

 

 

—

 

%

Tahoe Finco, LLC(5)(7)(19)(21)

 

First lien senior secured loan

 

L + 6.00%

 

9/29/2028

 

 

83,721

 

 

 

82,931

 

 

 

82,465

 

 

 

5.0

 

%

Tahoe Finco, LLC(5)(16)(17)(19)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

10/1/2027

 

 

-

 

 

 

(58

)

 

 

(94

)

 

 

—

 

%

 

 

 

16

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Thunder Purchaser, Inc. (dba Vector Solutions)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.75%

 

6/30/2028

 

 

29,090

 

 

 

28,826

 

 

 

28,726

 

 

 

1.7

 

%

Thunder Purchaser, Inc. (dba Vector Solutions)(5)(7)(21)

 

First lien senior secured loan

 

L + 5.75%

 

6/30/2028

 

 

7,008

 

 

 

6,943

 

 

 

6,920

 

 

 

0.4

 

%

Thunder Purchaser, Inc. (dba Vector Solutions)(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

8/17/2023

 

 

-

 

 

 

-

 

 

 

(15

)

 

 

—

 

%

Thunder Purchaser, Inc. (dba Vector Solutions)(5)(16)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

6/30/2027

 

 

367

 

 

 

349

 

 

 

341

 

 

 

—

 

%

When I Work, Inc.(5)(7)(21)

 

First lien senior secured loan

 

L + 7.00% PIK

 

11/2/2027

 

 

22,206

 

 

 

21,996

 

 

 

21,871

 

 

 

1.3

 

%

When I Work, Inc.(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/2/2027

 

 

-

 

 

 

(39

)

 

 

(62

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

398,196

 

 

 

392,751

 

 

 

391,567

 

 

 

23.5

 

%

Leisure and entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Troon Golf, L.L.C.(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

8/5/2027

 

 

70,591

 

 

 

70,270

 

 

 

70,238

 

 

 

4.2

 

%

Troon Golf, L.L.C.(5)(6)(16)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

8/5/2026

 

 

1,014

 

 

 

990

 

 

 

986

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

71,605

 

 

 

71,260

 

 

 

71,224

 

 

 

4.3

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gloves Buyer, Inc. (dba Protective Industrial Products)(5)(6)(21)

 

Second lien senior secured loan

 

L + 8.25%

 

12/29/2028

 

 

6,300

 

 

 

6,160

 

 

 

6,206

 

 

 

0.4

 

%

MHE Intermediate Holdings, LLC(5)(8)(21)

 

First lien senior secured loan

 

L + 5.75%

 

7/21/2027

 

 

40,866

 

 

 

40,497

 

 

 

40,150

 

 

 

2.4

 

%

MHE Intermediate Holdings, LLC (dba OnPoint Group)(5)(7)(16)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

7/21/2023

 

 

3,077

 

 

 

3,049

 

 

 

3,007

 

 

 

0.2

 

%

MHE Intermediate Holdings, LLC (dba OnPoint Group)(5)(6)(16)(21)

 

First lien senior secured revolving loan

 

L + 5.75%

 

7/21/2027

 

 

143

 

 

 

111

 

 

 

80

 

 

 

—

 

%

Sonny's Enterprises LLC(5)(6)(21)

 

First lien senior secured loan

 

L + 6.75%

 

8/5/2026

 

 

49,333

 

 

 

48,607

 

 

 

49,333

 

 

 

3.0

 

%

Sonny's Enterprises LLC(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.75%

 

8/5/2025

 

 

-

 

 

 

(53

)

 

 

-

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

99,719

 

 

 

98,371

 

 

 

98,776

 

 

 

6.0

 

%

 

 

 

17

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Professional services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apex Group Treasury LLC(5)(7)(19)(21)

 

Second lien senior secured loan

 

L + 6.75%

 

7/27/2029

 

 

5,000

 

 

 

4,953

 

 

 

4,925

 

 

 

0.3

 

%

Apex Group Treasury LLC(5)(16)(18)(19)(21)

 

Second lien senior secured delayed draw term loan

 

L + 6.75%

 

6/30/2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

Aptive Environmental, LLC(21)(25)

 

First lien senior secured loan

 

12% (incl. 6.00% PIK)

 

1/23/2026

 

 

2,528

 

 

 

2,075

 

 

 

2,052

 

 

 

0.1

 

%

Guidehouse Inc.(5)(6)(21)

 

First lien senior secured loan

 

L + 5.50%

 

10/16/2028

 

 

44,354

 

 

 

43,935

 

 

 

43,688

 

 

 

2.6

 

%

Relativity ODA LLC(5)(6)(21)

 

First lien senior secured loan

 

L + 7.50% PIK

 

5/12/2027

 

 

15,827

 

 

 

15,631

 

 

 

15,590

 

 

 

0.9

 

%

Relativity ODA LLC(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 6.50%

 

5/12/2027

 

 

-

 

 

 

(19

)

 

 

(22

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

67,709

 

 

 

66,575

 

 

 

66,233

 

 

 

3.9

 

%

Specialty retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Milan Laser Holdings LLC(5)(7)(21)

 

First lien senior secured loan

 

L + 5.00%

 

4/27/2027

 

 

41,160

 

 

 

40,802

 

 

 

40,748

 

 

 

2.4

 

%

Milan Laser Holdings LLC(5)(16)(17)(21)

 

First lien senior secured revolving loan

 

L + 5.00%

 

4/27/2026

 

 

-

 

 

 

(29

)

 

 

(35

)

 

 

—

 

%

Notorious Topco, LLC (dba Beauty Industry Group)(5)(8)(21)

 

First lien senior secured loan

 

L + 6.50%

 

11/23/2027

 

 

60,763

 

 

 

59,895

 

 

 

59,700

 

 

 

3.6

 

%

Notorious Topco, LLC (dba Beauty Industry Group)(5)(16)(17)(18)(21)

 

First lien senior secured delayed draw term loan

 

L + 6.50%

 

11/23/2023

 

 

-

 

 

 

(52

)

 

 

(44

)

 

 

—

 

%

Notorious Topco, LLC (dba Beauty Industry Group)(5)(7)(16)(21)

 

First lien senior secured revolving loan

 

L + 6.50%

 

5/24/2027

 

 

1,408

 

 

 

1,334

 

 

 

1,316

 

 

 

0.1

 

%

The Shade Store, LLC(5)(7)(21)

 

First lien senior secured loan

 

L + 6.00%

 

10/13/2027

 

 

58,943

 

 

 

58,254

 

 

 

57,912

 

 

 

3.5

 

%

The Shade Store, LLC(5)(8)(16)(21)

 

First lien senior secured revolving loan

 

L + 6.00%

 

10/13/2026

 

 

2,955

 

 

 

2,888

 

 

 

2,851

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

165,229

 

 

 

163,092

 

 

 

162,448

 

 

 

9.8

 

%

 

 

 

18

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Telecommunications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Park Place Technologies, LLC(5)(6)(20)(21)

 

First lien senior secured loan

 

L + 5.00%

 

11/10/2027

 

 

7,425

 

 

 

7,176

 

 

 

7,369

 

 

 

0.4

 

%

 

 

 

 

 

 

 

 

 

7,425

 

 

 

7,176

 

 

 

7,369

 

 

 

0.4

 

%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Motus Group, LLC(5)(7)(21)

 

Second lien senior secured loan

 

L + 6.50%

 

12/10/2029

 

 

10,000

 

 

 

9,903

 

 

 

9,875

 

 

 

0.6

 

%

 

 

 

 

 

 

 

 

 

10,000

 

 

 

9,903

 

 

 

9,875

 

 

 

0.6

 

%

Total non-controlled/non-affiliated portfolio company debt investments

 

 

 

 

 

 

 

 

2,818,422

 

 

 

2,777,871

 

 

 

2,765,678

 

 

 

166.5

 

%

Equity Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CD&R Value Building Partners I, L.P. (dba Belron)(19)(21)(23)(24)

 

LP Interest

 

N/A

 

N/A

 

 

33,000

 

 

 

33,108

 

 

 

33,000

 

 

 

2.0

 

%

Metis HoldCo, Inc. (dba Mavis Tire Express Services)(21)(23)(25)

 

Series A Convertible Preferred Stock

 

7.00% PIK

 

N/A

 

 

32,308

 

 

 

33,404

 

 

 

33,718

 

 

 

2.0

 

%

 

 

 

 

 

 

 

 

 

 

 

 

66,512

 

 

 

66,718

 

 

 

4.0

 

%

Buildings and real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dodge Construction Network Holdings, L.P.(21)(23)(24)

 

Class A-2 Common Units

 

N/A

 

N/A

 

 

431,889

 

 

 

368

 

 

 

368

 

 

 

—

 

%

Dodge Construction Network Holdings, L.P.(21)(23)(24)

 

Series A Preferred Units

 

N/A

 

N/A

 

 

0

 

 

 

9

 

 

 

9

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

 

377

 

 

 

377

 

 

 

—

 

%

 

 

 

19

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Business services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denali Holding, LP (dba Summit Companies)(21)(23)(24)

 

Class A Units

 

N/A

 

N/A

 

 

380,658

 

 

 

3,807

 

 

 

3,807

 

 

 

0.2

 

%

Hercules Buyer LLC (dba The Vincit Group)(21)(22)(23)(24)

 

Common Units

 

N/A

 

N/A

 

 

452

 

 

 

452

 

 

 

452

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

 

4,259

 

 

 

4,259

 

 

 

0.2

 

%

Consumer products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASP Conair Holdings LP(21)(23)(24)

 

Class A Units

 

N/A

 

N/A

 

 

12,857

 

 

 

1,286

 

 

 

1,286

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

 

 

 

1,286

 

 

 

1,286

 

 

 

0.1

 

%

Healthcare equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KPCI Holdings, LP(21)(23)(24)

 

LP Interest

 

N/A

 

N/A

 

 

6,701

 

 

 

6,701

 

 

 

7,212

 

 

 

0.4

 

%

Maia Aggregator, LP(21)(23)(24)

 

Class A-2 Units

 

N/A

 

N/A

 

 

112,360

 

 

 

112

 

 

 

112

 

 

 

—

 

%

Patriot Holdings SCSp (dba Corza Health, Inc.)(21)(23)(25)

 

Class A Units

 

8.00% PIK

 

N/A

 

 

1,653

 

 

 

1,796

 

 

 

1,796

 

 

 

0.1

 

%

Patriot Holdings SCSp (dba Corza Health, Inc.)(21)(23)(24)

 

Class B Units

 

N/A

 

N/A

 

 

22,767

 

 

 

44

 

 

 

258

 

 

 

—

 

%

Rhea Acquisition Holdings, LP(21)(23)(24)

 

Series A-2 Units

 

N/A

 

N/A

 

 

119,048

 

 

 

119

 

 

 

119

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

 

8,772

 

 

 

9,497

 

 

 

0.5

 

%

Healthcare providers and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KOBHG Holdings, L.P. (dba OB Hospitalist)(21)(23)(24)

 

LP Interest

 

N/A

 

N/A

 

 

3,017

 

 

 

3,017

 

 

 

3,017

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

 

 

 

3,017

 

 

 

3,017

 

 

 

0.2

 

%

 

 

 

20

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minerva Holdco, Inc.(21)(23)(24)(25)

 

Series A Preferred Stock

 

10.75% PIK

 

N/A

 

 

2,000

 

 

 

1,987

 

 

 

1,987

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

 

 

 

1,987

 

 

 

1,987

 

 

 

0.1

 

%

Human resource support services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunshine Software Holdings, Inc. (dba Cornerstone OnDemand)(21)(23)(25)

 

Series A Preferred Stock

 

10.50% PIK

 

N/A

 

 

12,750

 

 

 

12,729

 

 

 

12,515

 

 

 

0.8

 

%

 

 

 

 

 

 

 

 

 

 

 

 

12,729

 

 

 

12,515

 

 

 

0.8

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evolution Parent, LP (dba SIAA)(21)(23)(24)

 

LP Interest

 

N/A

 

N/A

 

 

8,919

 

 

 

892

 

 

 

892

 

 

 

0.1

 

%

GrowthCurve Capital Sunrise Co-Invest LP (dba Brightway)(21)(23)(24)

 

LP Interest

 

N/A

 

N/A

 

 

421

 

 

 

422

 

 

 

421

 

 

 

—

 

%

PCF Holdco, LLC (dba PCF Insurance Services)(21)(23)(24)

 

Class A Units

 

N/A

 

N/A

 

 

2,757,106

 

 

 

6,992

 

 

 

8,571

 

 

 

0.5

 

%

PCF Holdco, LLC (dba PCF Insurance Services)(21)(23)(24)

 

Class A Warrants

 

N/A

 

N/A

 

 

1,013,666

 

 

 

2,571

 

 

 

3,154

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

 

 

 

10,877

 

 

 

13,038

 

 

 

0.8

 

%

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BCTO WIW Holdings, Inc. (dba When I Work)(21)(23)(24)

 

Class A Common Stock

 

N/A

 

N/A

 

 

57,000

 

 

 

5,700

 

 

 

5,700

 

 

 

0.3

 

%

Brooklyn Lender Co-Invest 2, L.P. (dba Boomi)(21)(23)(24)

 

Common Units

 

N/A

 

N/A

 

 

1,729,439

 

 

 

1,729

 

 

 

1,729

 

 

 

0.1

 

%

Thunder Topco L.P. (dba Vector Solutions)(21)(23)(24)

 

Common Units

 

N/A

 

N/A

 

 

2,138,653

 

 

 

2,139

 

 

 

2,279

 

 

 

0.1

 

%

MessageBird Holding B.V.(19)(21)(23)(24)

 

Extended Series C Warrants

 

N/A

 

N/A

 

 

25,540

 

 

 

157

 

 

 

100

 

 

 

—

 

%

WMC Bidco, Inc. (dba West Monroe)(21)(23)(25)

 

Senior Preferred Stock

 

11.25% PIK

 

N/A

 

 

33,385

 

 

 

34,021

 

 

 

33,471

 

 

 

2.0

 

%

 

 

 

 

 

 

 

 

 

 

 

 

43,746

 

 

 

43,279

 

 

 

2.5

 

%

 

 

 

21

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(26)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gloves Holdings, LP (dba Protective Industrial Products)(21)(23)(24)

 

LP Interest

 

N/A

 

N/A

 

 

700

 

 

 

700

 

 

 

784

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

 

700

 

 

 

784

 

 

 

—

 

%

Professional services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evology LLC(21)(23)(24)

 

Class B Units

 

N/A

 

N/A

 

 

88

 

 

 

420

 

 

 

420

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

 

420

 

 

 

420

 

 

 

—

 

%

Total non-controlled/non-affiliated portfolio company equity investments

 

 

 

 

 

 

 

 

 

 

 

154,682

 

 

 

157,177

 

 

 

9.2

 

%

Total Investments

 

 

 

 

 

 

 

 

 

 

$

2,932,553

 

 

$

2,922,855

 

 

 

175.7

 

%

________________

(1)
Certain portfolio company investments are subject to contractual restrictions on sales.
(2)
Unless otherwise indicated, all investments are considered Level 3 investments.
(3)
The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.
(4)
As of March 31, 2022, the net estimated unrealized loss for U.S. federal income tax purposes was $5.9 million based on a tax cost basis of $2.9 billion. As of March 31, 2022, the estimated aggregate gross unrealized loss for U.S. federal income tax purposes was $13.0 million and the estimated aggregate gross unrealized gain for U.S. federal income tax purposes was $7.1 million.
(5)
Loan contains a variable rate structure and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, three-, six-, or twelve-month LIBOR), Secured Overnight Financing Rate ("SOFR" or "SR") (which can include one-, three-, six-, or twelve-month SOFR), Euro Interbank Offered Rate (“EURIBOR” or “E”), British pound sterling LIBOR (“GBPLIBOR” or “G”), Sterling Overnight Interbank Average Rate ("SONIA" or "SA") or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate ("Prime" or "P")), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.
(6)
The interest rate on these loans is subject to 1 month LIBOR, which as of March 31, 2022 was 0.45%.
(7)
The interest rate on these loans is subject to 3 month LIBOR, which as of March 31, 2022 was 0.96%.
(8)
The interest rate on these loans is subject to 6 month LIBOR, which as of March 31, 2022 was 1.47%.
(9)
The interest rate on these loans is subject to Prime, which as of March 31, 2022 was 3.50%.
(10)
The interest rate on these loans is subject to 3 month SOFR, which as of March 31, 2022 was 0.67%
(11)
The interest rate on these loans is subject to 6 month SOFR, which as of March 31, 2022 was 1.07%.
(12)
The interest rate on these loans is subject to SONIA, which as of March 31, 2022 was 0.69%.
(13)
The interest rate on these loans is subject to 6 month GBPLIBOR, which as of March 31, 2022 was 1.47%.
(14)
The interest rate on these loans is subject to 3 month EURIBOR, which as of March 31, 2022 was (0.46)%.
(15)
The interest rate on this loan is subject to 6 month EURIBOR, which as of March 31, 2022 was (0.37)%.
(16)
Position or portion thereof is an unfunded loan or equity commitment. See Note 7 “Commitments and Contingencies”.
(17)
The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.
(18)
The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.
(19)
This portfolio company is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of total assets. As of March 31, 2022, non-qualifying assets represented 10.9% of total assets as calculated in accordance with the regulatory requirements.
(20)
Level 2 investment.
(21)
Represents co-investment made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company relies on from the U.S. Securities and Exchange Commission. See Note 3 “Agreements and Related Party Transactions.”
(22)
We invest in this portfolio company through underlying blocker entities Hercules Blocker 1 LLC, Hercules Blocker 2 LLC, Hercules Blocker 3 LLC, Hercules Blocker 4 LLC, and Hercules Blocker 5 LLC.

 

22

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of March 31, 2022

(Amounts in thousands, except share amounts)

(Unaudited)

(23)
Security acquired in transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. as of March 31, 2022, the aggregate fair value of these securities is $157.2 million or 9.4% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

 

Portfolio Company

 

Investment

 

Acquisition Date

ASP Conair Holdings LP

 

Class A Units

 

May 17, 2021

BCTO WIW Holdings, Inc. (dba When I Work)

 

Class A Common Stock

 

November 2, 2021

Brooklyn Lender Co-Invest 2, L.P. (dba Boomi)

 

Common Units

 

October 1, 2021

CD&R Value Building Partners I, L.P. (dba Belron)

 

LP Interest

 

December 17, 2021

Denali Holding, LP (dba Summit Companies)

 

Class A Units

 

September 15, 2021

Dodge Construction Network Holdings, L.P.

 

Class A-2 Common Units

 

February 23, 2022

Dodge Construction Network Holdings, L.P.

 

Series A Preferred Units

 

February 23, 2022

Evology LLC

 

Class B Units

 

January 24, 2022

Evolution Parent, LP (dba SIAA)

 

LP Interest

 

April 30, 2021

Gloves Holdings, LP (dba Protective Industrial Products)

 

LP Interest

 

December 29, 2020

GrowthCurve Capital Sunrise Co-Invest LP (dba Brightway)

 

LP Interest

 

December 16, 2021

Hercules Buyer, LLC (dba The Vincit Group)

 

Common Units

 

December 15, 2020

KOBHG Holdings, L.P. (dba OB Hospitalist)

 

LP Interest

 

September 27, 2021

KPCI Holdings, LP

 

LP Interest

 

November 30, 2020

Maia Aggregator, LP

 

Class A-2 Units

 

February 1, 2022

MessageBird Holding B.V.

 

Extended Series C Warrants

 

May 5, 2021

Metis HoldCo, Inc. (dba Mavis Tire Express Services)

 

Series A Convertible Preferred Stock

 

May 4, 2021

Minerva Holdco, Inc.

 

Series A Preferred Stock

 

February 15, 2022

Patriot Holdings SCSp (dba Corza Health, Inc.)

 

Class A Units

 

January 29, 2021

Patriot Holdings SCSp (dba Corza Health, Inc.)

 

Class B Units

 

January 29, 2021

PCF Holdco, LLC (dba PCF Insurance Services)

 

Class A Units

 

November 1, 2021

PCF Holdco, LLC (dba PCF Insurance Services)

 

Class A Warrants

 

November 1, 2021

Rhea Acquistion Holdings, LP

 

Series A-2 Units

 

February 18, 2022

Sunshine Software Holdings, Inc. (dba Cornerstone OnDemand)

 

Series A Preferred Stock

 

October 15, 2021

Thunder Topco L.P. (dba Vector Solutions)

 

Common Units

 

June 30, 2021

WMC Bidco, Inc. (dba West Monroe)

 

Senior Preferred Stock

 

November 9, 2021

 

(24)
Investment is non-income producing.
(25)
Investment contains a fixed-rate structure.
(26)
Unless otherwise indicated, the Company’s portfolio companies are pledged as collateral supporting the amounts outstanding under the Revolving Credit Facility, SPV Asset Facility I and SPV Asset Facility II. See Note 6 “Debt”.
(27)
Investment is not pledged as collateral for the credit facilities.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

23

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Non-controlled/non-affiliated portfolio company investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and media

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Music Rights, LLC(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

8/28/2028

 

$

84,375

 

 

$

82,753

 

 

$

82,688

 

 

 

5.0

 

%

Global Music Rights, LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

8/27/2027

 

 

-

 

 

 

(141

)

 

 

(150

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

84,375

 

 

 

82,612

 

 

 

82,538

 

 

 

5.0

 

%

Aerospace and defense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peraton Corp.(5)(6)(18)

 

Second lien senior secured loan

 

L + 7.75%

 

2/1/2029

 

 

15,000

 

 

 

14,791

 

 

 

14,925

 

 

 

0.9

 

%

 

 

 

 

 

 

 

 

 

15,000

 

 

 

14,791

 

 

 

14,925

 

 

 

0.9

 

%

Buildings and real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Associations, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.50% (incl. 2.50% PIK)

 

7/2/2027

 

 

85,036

 

 

 

83,890

 

 

 

84,186

 

 

 

5.0

 

%

Associations, Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.50%

 

7/2/2027

 

 

-

 

 

 

(65

)

 

 

(53

)

 

 

—

 

%

Dodge Data & Analytics LLC(5)(8)(18)

 

First lien senior secured loan

 

L + 7.50%

 

4/14/2026

 

 

6,446

 

 

 

6,332

 

 

 

6,639

 

 

 

0.4

 

%

Dodge Data & Analytics LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 7.50%

 

4/14/2026

 

 

-

 

 

 

(6

)

 

 

-

 

 

 

—

 

%

RealPage, Inc.(5)(6)(18)

 

Second lien senior secured loan

 

L + 6.50%

 

4/23/2029

 

 

6,500

 

 

 

6,409

 

 

 

6,575

 

 

 

0.4

 

%

 

 

 

 

 

 

 

 

 

97,982

 

 

 

96,560

 

 

 

97,347

 

 

 

5.8

 

%

 

 

 

24

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Business services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denali Buyerco LLC (dba Summit Companies)(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

9/15/2028

 

 

62,809

 

 

 

62,205

 

 

 

62,182

 

 

 

3.8

 

%

Denali Buyerco LLC (dba Summit Companies)(5)(7)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

9/15/2023

 

 

3,860

 

 

 

3,713

 

 

 

3,821

 

 

 

0.2

 

%

Denali Buyerco LLC (dba Summit Companies)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

9/15/2027

 

 

-

 

 

 

(65

)

 

 

(69

)

 

 

—

 

%

Diamondback Acquisition, Inc. (dba Sphera)(5)(6)(18)

 

First lien senior secured loan

 

L + 5.50%

 

9/13/2028

 

 

47,827

 

 

 

46,903

 

 

 

46,871

 

 

 

2.8

 

%

Diamondback Acquisition, Inc. (dba Sphera)(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

9/13/2023

 

 

-

 

 

 

(91

)

 

 

(96

)

 

 

—

 

%

Gainsight, Inc.(5)(8)(18)

 

First lien senior secured loan

 

L + 6.75% PIK

 

7/30/2027

 

 

5,077

 

 

 

4,994

 

 

 

5,001

 

 

 

0.3

 

%

Gainsight, Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

7/30/2027

 

 

-

 

 

 

(14

)

 

 

(13

)

 

 

—

 

%

Hercules Borrower, LLC (dba The Vincit Group)(5)(7)(18)

 

First lien senior secured loan

 

L + 6.50%

 

12/15/2026

 

 

36,718

 

 

 

36,246

 

 

 

36,718

 

 

 

2.3

 

%

Hercules Borrower, LLC (dba The Vincit Group)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.50%

 

12/15/2026

 

 

404

 

 

 

400

 

 

 

400

 

 

 

—

 

%

Hercules Borrower, LLC (dba The Vincit Group)(5)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

9/10/2023

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

Hercules Borrower, LLC (dba The Vincit Group)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.50%

 

12/15/2026

 

 

-

 

 

 

(53

)

 

 

-

 

 

 

—

 

%

Hercules Buyer, LLC (dba The Vincit Group)(18)(19)(22)

 

Unsecured notes

 

0.48% PIK

 

12/14/2029

 

 

1,056

 

 

 

1,054

 

 

 

1,056

 

 

 

—

 

%

KPSKY Acquisition, Inc. (dba BluSky) (5)(6)(18)

 

First lien senior secured loan

 

L + 5.50%

 

10/19/2028

 

 

35,808

 

 

 

35,108

 

 

 

35,092

 

 

 

2.1

 

%

KPSKY Acquisition, Inc. (dba BluSky) (5)(9)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

P + 4.50%

 

10/19/2023

 

 

2,046

 

 

 

1,986

 

 

 

1,985

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

195,605

 

 

 

192,386

 

 

 

192,948

 

 

 

11.6

 

%

 

 

 

25

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Chemicals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aruba Investments Holdings, LLC (dba Angus Chemical Company)(5)(8)(18)

 

Second lien senior secured loan

 

L + 7.75%

 

11/24/2028

 

 

6,500

 

 

 

6,413

 

 

 

6,500

 

 

 

0.4

 

%

Gaylord Chemical Company, L.L.C.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.50%

 

3/30/2027

 

 

70,970

 

 

 

70,299

 

 

 

70,616

 

 

 

4.2

 

%

Gaylord Chemical Company, L.L.C.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.50%

 

3/30/2026

 

 

-

 

 

 

(35

)

 

 

(20

)

 

 

—

 

%

Velocity HoldCo III Inc. (dba VelocityEHS)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

4/22/2027

 

 

6,101

 

 

 

5,977

 

 

 

5,979

 

 

 

0.4

 

%

Velocity HoldCo III Inc. (dba VelocityEHS)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

4/22/2026

 

 

-

 

 

 

(7

)

 

 

(7

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

83,571

 

 

 

82,647

 

 

 

83,068

 

 

 

5.0

 

%

Consumer products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ConAir Holdings LLC(5)(7)(18)

 

Second lien senior secured loan

 

L + 7.50%

 

5/17/2029

 

 

45,000

 

 

 

44,312

 

 

 

45,000

 

 

 

2.7

 

%

Lignetics Investment Corp.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

11/1/2027

 

 

50,980

 

 

 

50,358

 

 

 

50,343

 

 

 

3.0

 

%

Lignetics Investment Corp.(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

11/1/2023

 

 

-

 

 

 

(77

)

 

 

(80

)

 

 

—

 

%

Lignetics Investment Corp.(5)(7)(13)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/2/2026

 

 

1,275

 

 

 

1,182

 

 

 

1,179

 

 

 

0.1

 

%

Olaplex, Inc.(5)(6)(18)

 

First lien senior secured loan

 

L + 6.25%

 

1/8/2026

 

 

12,104

 

 

 

12,004

 

 

 

12,104

 

 

 

0.7

 

%

 

 

 

 

 

 

 

 

 

109,359

 

 

 

107,779

 

 

 

108,546

 

 

 

6.5

 

%

Containers and packaging

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ascend Buyer, LLC (dba PPC Flexible Packaging)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

10/2/2028

 

 

50,206

 

 

 

49,718

 

 

 

49,703

 

 

 

3.0

 

%

 

 

 

26

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Ascend Buyer, LLC (dba PPC Flexible Packaging)(5)(7)(13)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

9/30/2027

 

 

851

 

 

 

802

 

 

 

799

 

 

 

—

 

%

Fortis Solutions Group, LLC(5)(7)(18)

 

First lien senior secured loan

 

L + 5.50%

 

10/13/2028

 

 

22,669

 

 

 

22,231

 

 

 

22,214

 

 

 

1.3

 

%

Fortis Solutions Group, LLC(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

10/13/2023

 

 

-

 

 

 

(89

)

 

 

(93

)

 

 

—

 

%

Fortis Solutions Group, LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.50%

 

10/15/2027

 

 

-

 

 

 

(61

)

 

 

(64

)

 

 

—

 

%

Pregis Topco LLC(5)(7)(18)

 

Second lien senior secured loan

 

L + 6.75%

 

8/1/2029

 

 

30,000

 

 

 

30,000

 

 

 

30,000

 

 

 

1.8

 

%

Pregis Topco LLC(5)(7)(18)

 

Second lien senior secured loan

 

L + 8.00%

 

8/1/2029

 

 

2,500

 

 

 

2,500

 

 

 

2,500

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

106,226

 

 

 

105,101

 

 

 

105,059

 

 

 

6.2

 

%

Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individual Foodservice Holdings, LLC(5)(8)(18)

 

First lien senior secured loan

 

L + 6.25%

 

11/21/2025

 

 

41,052

 

 

 

40,551

 

 

 

40,845

 

 

 

2.4

 

%

Individual Foodservice Holdings, LLC(5)(8)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.25%

 

6/30/2022

 

 

2,095

 

 

 

1,918

 

 

 

2,007

 

 

 

0.1

 

%

Individual Foodservice Holdings, LLC(5)(6)(13)(18)

 

First lien senior secured revolving loan

 

L + 6.25%

 

11/22/2024

 

 

111

 

 

 

83

 

 

 

99

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

43,258

 

 

 

42,552

 

 

 

42,951

 

 

 

2.5

 

%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pluralsight, LLC(5)(8)(18)

 

First lien senior secured loan

 

L + 8.00%

 

4/6/2027

 

 

20,641

 

 

 

20,448

 

 

 

20,434

 

 

 

1.2

 

%

Pluralsight, LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 8.00%

 

4/6/2027

 

 

-

 

 

 

(11

)

 

 

(13

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

20,641

 

 

 

20,437

 

 

 

20,421

 

 

 

1.2

 

%

 

 

27

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Financial services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AxiomSL Group, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

12/3/2027

 

 

45,989

 

 

 

45,489

 

 

 

45,643

 

 

 

2.7

 

%

AxiomSL Group, Inc.(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

7/21/2023

 

 

-

 

 

 

(9

)

 

 

-

 

 

 

—

 

%

AxiomSL Group, Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

12/3/2025

 

 

-

 

 

 

(42

)

 

 

(30

)

 

 

—

 

%

Hg Genesis 8 Sumoco Limited(5)(10)(16)(18)

 

Unsecured facility

 

S + 7.50% PIK

 

8/28/2025

 

 

20,204

 

 

 

19,732

 

 

 

20,204

 

 

 

1.2

 

%

Hg Saturn LuchaCo Limited(5)(10)(16)(18)

 

Unsecured facility

 

S + 7.50% PIK

 

3/30/2026

 

 

25,363

 

 

 

25,676

 

 

 

25,110

 

 

 

1.5

 

%

Muine Gall, LLC(5)(8)(16)(18)(24)

 

First lien senior secured loan

 

L + 7.00% PIK

 

9/20/2024

 

 

81,667

 

 

 

81,780

 

 

 

81,667

 

 

 

4.9

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(5)(6)(18)

 

First lien senior secured loan

 

L + 5.75%

 

9/8/2025

 

 

8,559

 

 

 

8,478

 

 

 

8,505

 

 

 

0.5

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(5)(6)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

10/2/2023

 

 

1,680

 

 

 

1,646

 

 

 

1,669

 

 

 

0.1

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

9/8/2025

 

 

-

 

 

 

(8

)

 

 

(4

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

183,462

 

 

 

182,742

 

 

 

182,764

 

 

 

10.9

 

%

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balrog Acquisition, Inc. (dba BakeMark)(5)(8)(18)

 

Second lien senior secured loan

 

L + 7.00%

 

9/3/2029

 

 

6,000

 

 

 

5,951

 

 

 

5,950

 

 

 

0.4

 

%

BP Veraison Buyer, LLC (dba Sun World)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

5/12/2027

 

 

35,497

 

 

 

35,095

 

 

 

35,142

 

 

 

2.1

 

%

BP Veraison Buyer, LLC (dba Sun World)(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

5/12/2023

 

 

-

 

 

 

(17

)

 

 

-

 

 

 

—

 

%

BP Veraison Buyer, LLC (dba Sun World)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

5/12/2027

 

 

-

 

 

 

(50

)

 

 

(45

)

 

 

—

 

%

 

 

28

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Nutraceutical International Corporation(5)(6)(18)

 

First lien senior secured loan

 

L + 7.00%

 

9/30/2026

 

 

11,471

 

 

 

11,329

 

 

 

11,240

 

 

 

0.7

 

%

Nutraceutical International Corporation(5)(6)(18)

 

First lien senior secured revolving loan

 

L + 7.00%

 

9/30/2025

 

 

735

 

 

 

727

 

 

 

721

 

 

 

—

 

%

Shearer's Foods, LLC(5)(6)(18)

 

Second lien senior secured loan

 

L + 7.75%

 

9/22/2028

 

 

30,000

 

 

 

29,735

 

 

 

30,000

 

 

 

1.8

 

%

Ultimate Baked Goods Midco, LLC(5)(6)(18)

 

First lien senior secured loan

 

L + 6.25%

 

8/13/2027

 

 

16,500

 

 

 

16,109

 

 

 

16,088

 

 

 

1.0

 

%

Ultimate Baked Goods Midco, LLC(5)(8)(13)(18)

 

First lien senior secured revolving loan

 

L + 6.25%

 

8/13/2027

 

 

1,050

 

 

 

1,003

 

 

 

1,000

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

101,253

 

 

 

99,882

 

 

 

100,096

 

 

 

6.1

 

%

Healthcare equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medline Borrower, LP(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 3.25%

 

10/21/2026

 

 

-

 

 

 

(40

)

 

 

(42

)

 

 

—

 

%

Packaging Coordinators Midco, Inc.(5)(7)(18)

 

Second lien senior secured loan

 

L + 7.00%

 

11/30/2028

 

 

54,269

 

 

 

53,046

 

 

 

53,184

 

 

 

3.2

 

%

Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.)(5)(7)(18)

 

First lien senior secured loan

 

L + 6.75%

 

1/31/2028

 

 

38,382

 

 

 

37,796

 

 

 

37,901

 

 

 

2.3

 

%

Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.75%

 

1/29/2026

 

 

-

 

 

 

(45

)

 

 

(33

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

92,651

 

 

 

90,757

 

 

 

91,010

 

 

 

5.5

 

%

Healthcare providers and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ex Vivo Parent Inc. (dba OB Hospitalist)(5)(7)(18)

 

First lien senior secured loan

 

L + 9.50% PIK

 

9/27/2028

 

 

26,145

 

 

 

25,636

 

 

 

25,622

 

 

 

1.5

 

%

National Dentex Labs LLC (fka Barracuda Dental LLC)(5)(7)(18)

 

First lien senior secured loan

 

L + 7.00%

 

10/27/2025

 

 

11,787

 

 

 

11,622

 

 

 

11,699

 

 

 

0.7

 

%

National Dentex Labs LLC (fka Barracuda Dental LLC)(5)(7)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 7.00%

 

3/31/2022

 

 

5,930

 

 

 

5,861

 

 

 

5,886

 

 

 

0.4

 

%

 

 

29

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

National Dentex Labs LLC (fka Barracuda Dental LLC)(5)(7)(13)(18)

 

First lien senior secured revolving loan

 

L + 7.00%

 

10/27/2025

 

 

507

 

 

 

476

 

 

 

496

 

 

 

—

 

%

OB Hospitalist Group, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 5.50%

 

9/27/2027

 

 

52,849

 

 

 

51,831

 

 

 

51,792

 

 

 

3.1

 

%

OB Hospitalist Group, Inc.(5)(6)(13)(18)

 

First lien senior secured revolving loan

 

L + 5.50%

 

9/27/2027

 

 

731

 

 

 

600

 

 

 

594

 

 

 

—

 

%

Phoenix Newco, Inc. (dba Parexel)(5)(6)(18)

 

Second lien senior secured loan

 

L + 6.50%

 

11/15/2029

 

 

85,000

 

 

 

84,160

 

 

 

84,150

 

 

 

5.0

 

%

Quva Pharma, Inc.(5)(8)(18)

 

First lien senior secured loan

 

L + 5.50%

 

4/12/2028

 

 

11,789

 

 

 

11,464

 

 

 

11,464

 

 

 

0.7

 

%

Quva Pharma, Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.50%

 

4/10/2026

 

 

-

 

 

 

(30

)

 

 

(33

)

 

 

—

 

%

Refresh Parent Holdings, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.50%

 

12/9/2026

 

 

14,829

 

 

 

14,639

 

 

 

14,717

 

 

 

0.9

 

%

Refresh Parent Holdings, Inc.(5)(7)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.50%

 

6/9/2022

 

 

4,744

 

 

 

4,681

 

 

 

4,707

 

 

 

0.3

 

%

Refresh Parent Holdings, Inc.(5)(7)(13)(18)

 

First lien senior secured revolving loan

 

L + 6.50%

 

12/9/2026

 

 

647

 

 

 

624

 

 

 

633

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

214,958

 

 

 

211,564

 

 

 

211,727

 

 

 

12.6

 

%

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BCPE Osprey Buyer, Inc. (dba PartsSource)(5)(8)(18)

 

First lien senior secured loan

 

L + 5.75%

 

8/23/2028

 

 

54,310

 

 

 

53,480

 

 

 

53,441

 

 

 

3.2

 

%

BCPE Osprey Buyer, Inc. (dba PartsSource)(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

8/23/2023

 

 

-

 

 

 

(71

)

 

 

(63

)

 

 

—

 

%

BCPE Osprey Buyer, Inc. (dba PartsSource)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

8/21/2026

 

 

-

 

 

 

(90

)

 

 

(90

)

 

 

—

 

%

Datix Bidco Limited (dba RLDatix)(5)(11)(16)(18)

 

First lien senior secured loan

 

G + 4.50%

 

4/27/2025

 

 

432

 

 

 

430

 

 

 

424

 

 

 

—

 

%

Datix Bidco Limited (dba RLDatix)(5)(11)(16)(18)

 

Second lien senior secured loan

 

G + 7.75%

 

4/27/2026

 

 

2,257

 

 

 

2,248

 

 

 

2,218

 

 

 

0.1

 

%

 

 

 

30

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

GI Ranger Intermediate, LLC (dba Rectangle Health)(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

10/30/2028

 

 

18,238

 

 

 

17,881

 

 

 

17,873

 

 

 

1.1

 

%

GI Ranger Intermediate, LLC (dba Rectangle Health)(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

10/30/2023

 

 

-

 

 

 

(27

)

 

 

(28

)

 

 

—

 

%

GI Ranger Intermediate, LLC (dba Rectangle Health)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

10/29/2027

 

 

-

 

 

 

(32

)

 

 

(33

)

 

 

—

 

%

Inovalon Holdings, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

11/24/2028

 

 

50,531

 

 

 

49,283

 

 

 

49,268

 

 

 

3.0

 

%

Inovalon Holdings, Inc.(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

5/24/2024

 

 

-

 

 

 

(66

)

 

 

(67

)

 

 

—

 

%

Inovalon Holdings, Inc.(5)(7)(18)

 

Second lien senior secured loan

 

L + 10.50% PIK

 

11/24/2033

 

 

24,071

 

 

 

23,591

 

 

 

23,589

 

 

 

1.4

 

%

Intelerad Medical Systems Incorporated(5)(7)(16)(18)

 

First lien senior secured loan

 

L + 6.25%

 

8/21/2026

 

 

42,802

 

 

 

42,286

 

 

 

42,695

 

 

 

2.6

 

%

Intelerad Medical Systems Incorporated(5)(7)(13)(16)(18)

 

First lien senior secured revolving loan

 

L + 6.25%

 

8/21/2026

 

 

1,104

 

 

 

1,104

 

 

 

1,099

 

 

 

0.1

 

%

RL Datix Holdings (USA), Inc.(5)(8)(16)(18)

 

First lien senior secured loan

 

L + 4.50%

 

4/28/2025

 

 

5,000

 

 

 

4,902

 

 

 

4,913

 

 

 

0.3

 

%

RL Datix Holdings (USA), Inc.(5)(8)(16)(18)

 

Second lien senior secured loan

 

L + 7.75%

 

4/27/2026

 

 

5,000

 

 

 

4,897

 

 

 

4,913

 

 

 

0.3

 

%

 

 

 

 

 

 

 

 

 

203,745

 

 

 

199,816

 

 

 

200,152

 

 

 

12.1

 

%

Household products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walker Edison Furniture Company LLC(5)(7)(18)

 

First lien senior secured loan

 

L + 8.75% (incl. 3.00% PIK)

 

3/31/2027

 

 

24,985

 

 

 

24,985

 

 

 

23,736

 

 

 

1.4

 

%

 

 

 

 

 

 

 

 

 

24,985

 

 

 

24,985

 

 

 

23,736

 

 

 

1.4

 

%

Human resource support services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cornerstone OnDemand, Inc.(5)(8)(18)

 

Second lien senior secured loan

 

L + 6.50%

 

10/15/2029

 

 

44,583

 

 

 

43,927

 

 

 

43,915

 

 

 

2.6

 

%

 

 

 

31

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

IG Investments Holdings, LLC (dba Insight Global)(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

9/22/2028

 

 

69,407

 

 

 

68,066

 

 

 

68,192

 

 

 

4.1

 

%

IG Investments Holdings, LLC (dba Insight Global)(5)(6)(13)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

9/22/2027

 

 

2,710

 

 

 

2,606

 

 

 

2,615

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

116,700

 

 

 

114,599

 

 

 

114,722

 

 

 

6.9

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alera Group, Inc.(5)(6)(18)

 

First lien senior secured loan

 

L + 5.50%

 

10/2/2028

 

 

69,915

 

 

 

68,389

 

 

 

68,342

 

 

 

4.1

 

%

Alera Group, Inc.(5)(6)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

10/2/2023

 

 

19,210

 

 

 

18,780

 

 

 

18,769

 

 

 

1.1

 

%

Ardonagh Midco 2 Plc(16)(18)(22)

 

Unsecured notes

 

12.75% PIK

 

1/15/2027

 

 

226

 

 

 

225

 

 

 

250

 

 

 

—

 

%

Ardonagh Midco 3 Plc(5)(10)(16)(18)

 

First lien senior secured loan

 

S + 6.75%

 

7/14/2026

 

 

2,524

 

 

 

2,294

 

 

 

2,524

 

 

 

0.2

 

%

Ardonagh Midco 3 Plc(5)(12)(16)(18)

 

First lien senior secured loan

 

E + 6.75%

 

7/14/2026

 

 

223

 

 

 

215

 

 

 

224

 

 

 

—

 

%

Ardonagh Midco 3 Plc(5)(7)(16)(18)

 

First lien senior secured loan

 

L + 5.50%

 

7/14/2026

 

 

576

 

 

 

565

 

 

 

576

 

 

 

—

 

%

Ardonagh Midco 3 Plc(5)(13)(15)(16)(18)

 

First lien senior secured delayed draw term loan

 

S + 6.00%

 

8/19/2023

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

%

Asurion, LLC(5)(6)(17)(18)

 

Second lien senior secured loan

 

L + 5.25%

 

1/31/2028

 

 

5,000

 

 

 

5,000

 

 

 

5,013

 

 

 

0.3

 

%

Asurion, LLC(5)(6)(17)(18)

 

Second lien senior secured loan

 

L + 5.25%

 

1/22/2029

 

 

15,000

 

 

 

14,857

 

 

 

14,928

 

 

 

0.9

 

%

Brightway Holdings, LLC(5)(7)(18)

 

First lien senior secured loan

 

L + 6.50%

 

12/16/2027

 

 

17,895

 

 

 

17,672

 

 

 

17,671

 

 

 

1.1

 

%

Brightway Holdings, LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.50%

 

12/16/2027

 

 

—

 

 

 

(26

)

 

 

(26

)

 

 

—

 

%

Evolution BuyerCo, Inc. (dba SIAA)(5)(7)(18)

 

First lien senior secured loan

 

L + 6.25%

 

4/28/2028

 

 

29,804

 

 

 

29,409

 

 

 

29,431

 

 

 

1.8

 

%

 

 

 

32

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Evolution BuyerCo, Inc. (dbaSIAA)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.25%

 

4/30/2027

 

 

—

 

 

 

(28

)

 

 

(28

)

 

 

—

 

%

KUSRP Intermediate, Inc. (dba U.S. Retirement and Benefits Partners)(5)(7)(18)

 

First lien senior secured loan

 

L + 9.50% PIK

 

7/24/2028

 

 

12,348

 

 

 

12,113

 

 

 

12,101

 

 

 

0.7

 

%

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(5)(8)(18)

 

First lien senior secured loan

 

L + 6.00%

 

11/1/2028

 

 

27,311

 

 

 

27,044

 

 

 

27,038

 

 

 

1.6

 

%

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(5)(8)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

5/1/2023

 

 

4,822

 

 

 

4,774

 

 

 

4,774

 

 

 

0.3

 

%

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/1/2027

 

 

—

 

 

 

(15

)

 

 

(16

)

 

 

—

 

%

PCF Midco II, LLC (dba PCF Insurance Services)(18)(22)

 

First lien senior secured loan

 

9.00% PIK

 

10/31/2031

 

 

32,133

 

 

 

29,111

 

 

 

29,081

 

 

 

1.7

 

%

TEMPO BUYER CORP. (dba Global Claims Services)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.50%

 

8/28/2028

 

 

36,524

 

 

 

35,823

 

 

 

35,793

 

 

 

2.1

 

%

TEMPO BUYER CORP. (dba Global Claims Services)(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

8/26/2023

 

 

-

 

 

 

(98

)

 

 

(103

)

 

 

—

 

%

TEMPO BUYER CORP. (dba Global Claims Services)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.50%

 

8/26/2027

 

 

-

 

 

 

(97

)

 

 

(103

)

 

 

—

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.50%

 

7/23/2027

 

 

15,055

 

 

 

14,771

 

 

 

14,754

 

 

 

0.9

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(5)(7)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.50%

 

7/23/2027

 

 

18

 

 

 

(2

)

 

 

(4

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

288,584

 

 

 

280,776

 

 

 

280,989

 

 

 

16.8

 

%

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bayshore Intermediate #2, L.P. (dba Boomi)(5)(7)(18)

 

First lien senior secured loan

 

L + 7.75% PIK

 

10/2/2028

 

 

19,121

 

 

 

18,702

 

 

 

18,690

 

 

 

1.1

 

%

Bayshore Intermediate #2, L.P. (dba Boomi)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.75%

 

10/1/2027

 

 

-

 

 

 

(34

)

 

 

(36

)

 

 

—

 

%

BCPE Nucleon (DE) SPV, LP(5)(8)(18)

 

First lien senior secured loan

 

L + 7.00%

 

9/24/2026

 

 

40,000

 

 

 

39,489

 

 

 

39,800

 

 

 

2.4

 

%

 

 

 

33

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

BCTO BSI Buyer, Inc. (dba Buildertrend)(5)(7)(18)

 

First lien senior secured loan

 

L + 7.00%

 

12/23/2026

 

 

8,482

 

 

 

8,409

 

 

 

8,440

 

 

 

0.5

 

%

BCTO BSI Buyer, Inc. (dba Buildertrend)(5)(7)(13)(18)

 

First lien senior secured revolving loan

 

L + 7.00%

 

12/23/2026

 

 

573

 

 

 

565

 

 

 

568

 

 

 

—

 

%

CivicPlus, LLC(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

8/24/2027

 

 

9,387

 

 

 

9,297

 

 

 

9,293

 

 

 

0.6

 

%

CivicPlus, LLC(5)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

8/24/2023

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

CivicPlus, LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

8/24/2027

 

 

-

 

 

 

(8

)

 

 

(9

)

 

 

—

 

%

EET Buyer, Inc. (dba e-Emphasys)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

11/8/2027

 

 

19,545

 

 

 

19,355

 

 

 

19,350

 

 

 

1.2

 

%

EET Buyer, Inc. (dba e-Emphasys)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

11/8/2027

 

 

-

 

 

 

(19

)

 

 

(20

)

 

 

—

 

%

Forescout Technologies, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 9.50% (incl. 9.50% PIK)

 

8/17/2026

 

 

23,458

 

 

 

23,161

 

 

 

23,458

 

 

 

1.4

 

%

Forescout Technologies, Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 8.50%

 

8/18/2025

 

 

-

 

 

 

(29

)

 

 

-

 

 

 

—

 

%

GovBrands Intermediate, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 5.50%

 

8/4/2027

 

 

8,346

 

 

 

8,149

 

 

 

8,137

 

 

 

0.5

 

%

GovBrands Intermediate, Inc.(5)(6)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

8/4/2023

 

 

1,883

 

 

 

1,827

 

 

 

1,825

 

 

 

0.1

 

%

GovBrands Intermediate, Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.50%

 

8/4/2027

 

 

-

 

 

 

(21

)

 

 

(22

)

 

 

—

 

%

Granicus, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.50%

 

1/29/2027

 

 

13,495

 

 

 

13,212

 

 

 

13,259

 

 

 

0.8

 

%

Granicus, Inc.(5)(7)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

4/23/2023

 

 

1,535

 

 

 

1,498

 

 

 

1,501

 

 

 

0.1

 

%

Granicus, Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.50%

 

1/29/2027

 

 

-

 

 

 

(24

)

 

 

(21

)

 

 

—

 

%

GS Acquisitionco, Inc. (dba insightsoftware)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

5/25/2026

 

 

5,805

 

 

 

5,777

 

 

 

5,776

 

 

 

0.3

 

%

 

 

 

34

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

GS Acquisitionco, Inc. (dba insightsoftware)(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

11/2/2022

 

 

-

 

 

 

(12

)

 

 

(13

)

 

 

—

 

%

Hyland Software, Inc.(5)(6)(18)

 

Second lien senior secured loan

 

L + 6.25%

 

7/7/2025

 

 

6,000

 

 

 

5,998

 

 

 

6,038

 

 

 

0.4

 

%

MessageBird BidCo B.V.(5)(7)(16)(18)

 

First lien senior secured loan

 

L + 6.75%

 

5/5/2027

 

 

16,000

 

 

 

15,677

 

 

 

15,680

 

 

 

0.9

 

%

Ministry Brands Holdings, LLC. (5)(7)(18)

 

First lien senior secured loan

 

L + 5.50%

 

12/29/2028

 

 

10,505

 

 

 

10,295

 

 

 

10,295

 

 

 

0.6

 

%

Ministry Brands Holdings, LLC. (5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

12/29/2023

 

 

-

 

 

 

(34

)

 

 

(34

)

 

 

—

 

%

Ministry Brands Holdings, LLC. (5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.50%

 

12/30/2027

 

 

-

 

 

 

(20

)

 

 

(20

)

 

 

—

 

%

Proofpoint, Inc.(5)(7)(18)

 

Second lien senior secured loan

 

L + 6.25%

 

8/31/2029

 

 

7,500

 

 

 

7,464

 

 

 

7,463

 

 

 

0.4

 

%

QAD Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

11/5/2027

 

 

46,500

 

 

 

45,590

 

 

 

45,570

 

 

 

2.7

 

%

QAD Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/5/2027

 

 

-

 

 

 

(117

)

 

 

(120

)

 

 

—

 

%

Tahoe Finco, LLC(5)(7)(16)(18)

 

First lien senior secured loan

 

L + 6.00%

 

9/29/2028

 

 

83,721

 

 

 

82,907

 

 

 

82,716

 

 

 

5.0

 

%

Tahoe Finco, LLC(5)(13)(14)(16)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

10/1/2027

 

 

-

 

 

 

(60

)

 

 

(75

)

 

 

—

 

%

Thunder Purchaser, Inc. (dba Vector Solutions)(5)(8)(18)

 

First lien senior secured loan

 

L + 5.75%

 

6/30/2028

 

 

29,163

 

 

 

28,890

 

 

 

28,945

 

 

 

1.7

 

%

Thunder Purchaser, Inc. (dba Vector Solutions)(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

6/30/2028

 

 

7,025

 

 

 

6,958

 

 

 

6,972

 

 

 

0.4

 

%

Thunder Purchaser, Inc. (dba Vector Solutions)(5)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

8/17/2023

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

Thunder Purchaser, Inc. (dba Vector Solutions)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

6/30/2027

 

 

-

 

 

 

(20

)

 

 

(16

)

 

 

—

 

%

When I Work, Inc.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

11/2/2027

 

 

22,206

 

 

 

21,988

 

 

 

21,982

 

 

 

1.3

 

%

 

 

 

35

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

When I Work, Inc.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

11/2/2027

 

 

-

 

 

 

(40

)

 

 

(42

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

380,250

 

 

 

374,770

 

 

 

375,330

 

 

 

22.4

 

%

Leisure and entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Troon Golf, L.L.C.(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

8/5/2027

 

 

70,769

 

 

 

70,434

 

 

 

70,415

 

 

 

4.2

 

%

Troon Golf, L.L.C.(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

8/5/2026

 

 

-

 

 

 

(25

)

 

 

(27

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

70,769

 

 

 

70,409

 

 

 

70,388

 

 

 

4.2

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gloves Buyer, Inc. (dba Protective Industrial Products)(5)(6)(18)

 

Second lien senior secured loan

 

L + 8.25%

 

12/29/2028

 

 

6,300

 

 

 

6,156

 

 

 

6,221

 

 

 

0.4

 

%

MHE Intermediate Holdings, LLC(5)(7)(18)

 

First lien senior secured loan

 

L + 5.75%

 

7/21/2027

 

 

40,969

 

 

 

40,584

 

 

 

40,558

 

 

 

2.4

 

%

MHE Intermediate Holdings, LLC (dba OnPoint Group)(5)(7)(13)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

7/21/2023

 

 

3,085

 

 

 

3,055

 

 

 

3,054

 

 

 

0.2

 

%

MHE Intermediate Holdings, LLC (dba OnPoint Group)(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.75%

 

7/21/2027

 

 

-

 

 

 

(33

)

 

 

(36

)

 

 

—

 

%

Sonny's Enterprises LLC(5)(6)(18)

 

First lien senior secured loan

 

L + 6.75%

 

8/5/2026

 

 

49,457

 

 

 

48,695

 

 

 

49,457

 

 

 

3.0

 

%

Sonny's Enterprises LLC(5)(6)(13)(18)

 

First lien senior secured revolving loan

 

L + 6.75%

 

8/5/2025

 

 

563

 

 

 

507

 

 

 

563

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

100,374

 

 

 

98,964

 

 

 

99,817

 

 

 

6.0

 

%

Professional services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apex Group Treasury LLC(5)(7)(16)(18)

 

Second lien senior secured loan

 

L + 6.75%

 

7/27/2029

 

 

5,000

 

 

 

4,952

 

 

 

4,950

 

 

 

0.3

 

%

 

 

 

36

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Apex Group Treasury LLC(5)(13)(15)(16)(18)

 

Second lien senior secured delayed draw term loan

 

L + 6.75%

 

6/30/2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

—

 

%

Guidehouse Inc.(5)(6)(18)

 

First lien senior secured loan

 

L + 5.50%

 

10/16/2028

 

 

44,465

 

 

 

44,032

 

 

 

44,020

 

 

 

2.6

 

%

Guidehouse Inc.(5)(13)(18)

 

First lien senior secured revolving loan

 

L + 5.50%

 

10/15/2027

 

 

-

 

 

 

-

 

 

 

(34

)

 

 

—

 

%

Relativity ODA LLC(5)(6)(18)

 

First lien senior secured loan

 

L + 7.50% PIK

 

5/12/2027

 

 

15,590

 

 

 

15,387

 

 

 

15,396

 

 

 

0.9

 

%

Relativity ODA LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.50%

 

5/12/2027

 

 

-

 

 

 

(20

)

 

 

(18

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

65,055

 

 

 

64,351

 

 

 

64,314

 

 

 

3.8

 

%

Specialty retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Milan Laser Holdings LLC(5)(7)(18)

 

First lien senior secured loan

 

L + 5.00%

 

4/27/2027

 

 

41,263

 

 

 

40,891

 

 

 

40,954

 

 

 

2.5

 

%

Milan Laser Holdings LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 5.00%

 

4/27/2026

 

 

-

 

 

 

(30

)

 

 

(26

)

 

 

—

 

%

Notorious Topco, LLC (dba Beauty Industry Group)(5)(7)(18)

 

First lien senior secured loan

 

L + 6.50%

 

11/23/2027

 

 

60,915

 

 

 

60,015

 

 

 

60,002

 

 

 

3.6

 

%

Notorious Topco, LLC (dba Beauty Industry Group)(5)(13)(14)(15)(18)

 

First lien senior secured delayed draw term loan

 

L + 6.50%

 

11/23/2023

 

 

-

 

 

 

(54

)

 

 

(22

)

 

 

—

 

%

Notorious Topco, LLC (dba Beauty Industry Group)(5)(7)(13)(18)

 

First lien senior secured revolving loan

 

L + 6.50%

 

5/24/2027

 

 

880

 

 

 

803

 

 

 

801

 

 

 

—

 

%

The Shade Store, LLC(5)(7)(18)

 

First lien senior secured loan

 

L + 6.00%

 

10/13/2027

 

 

59,091

 

 

 

58,375

 

 

 

58,352

 

 

 

3.5

 

%

The Shade Store, LLC(5)(13)(14)(18)

 

First lien senior secured revolving loan

 

L + 6.00%

 

10/13/2026

 

 

-

 

 

 

(71

)

 

 

(74

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

162,149

 

 

 

159,929

 

 

 

159,987

 

 

 

9.6

 

%

Telecommunications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Park Place Technologies, LLC(5)(6)(17)(18)

 

First lien senior secured loan

 

L + 5.00%

 

11/10/2027

 

 

7,444

 

 

 

7,185

 

 

 

7,416

 

 

 

0.4

 

%

 

 

 

 

 

 

 

 

 

7,444

 

 

 

7,185

 

 

 

7,416

 

 

 

0.4

 

%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Motus Group, LLC(5)(7)(18)

 

Second lien senior secured loan

 

L + 6.50%

 

12/10/2029

 

 

10,000

 

 

 

9,901

 

 

 

9,900

 

 

 

0.6

 

%

 

 

 

 

 

 

 

 

 

10,000

 

 

 

9,901

 

 

 

9,900

 

 

 

0.6

 

%

Total non-controlled/non-affiliated portfolio company debt investments

 

 

 

 

 

 

 

 

2,778,396

 

 

 

2,735,495

 

 

 

2,740,151

 

 

 

164.0

 

%

Equity Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CD&R Value Building Partners I, L.P. (dba Belron)(16)(18)(20)(21)

 

LP Interest

 

N/A

 

N/A

 

 

33,000

 

 

 

33,065

 

 

 

33,000

 

 

 

2.0

 

%

Metis HoldCo, Inc. (dba Mavis Tire Express Services)(18)(20)

 

Series A Convertible Preferred Stock

 

7.00% PIK

 

N/A

 

 

32,308

 

 

 

32,783

 

 

 

33,645

 

 

 

2.0

 

%

 

 

 

 

 

 

 

 

 

 

 

 

65,848

 

 

 

66,645

 

 

 

4.0

 

%

Buildings and real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Skyline Holdco B, Inc. (dba Dodge Data & Analytics)(18)(20)(21)

 

Series A Preferred Stock

 

N/A

 

N/A

 

 

431,889

 

 

 

648

 

 

 

715

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

 

648

 

 

 

715

 

 

 

—

 

%

Business services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denali Holding, LP (dba Summit Companies)(18)(20)(21)

 

Class A Units

 

N/A

 

N/A

 

 

380,658

 

 

 

3,807

 

 

 

3,807

 

 

 

0.2

 

%

 

 

 

38

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Hercules Buyer LLC (dba The Vincit Group)(18)(19)(20)(21)

 

Common Units

 

N/A

 

N/A

 

 

452

 

 

 

450

 

 

 

452

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

 

4,257

 

 

 

4,259

 

 

 

0.2

 

%

Consumer products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASP Conair Holdings LP(18)(20)(21)

 

Class A Units

 

N/A

 

N/A

 

 

12,857

 

 

 

1,286

 

 

 

1,286

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

 

 

 

1,286

 

 

 

1,286

 

 

 

0.1

 

%

Healthcare equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KPCI Holdings, LP(18)(20)(21)

 

LP Interest

 

N/A

 

N/A

 

 

6,701

 

 

 

6,701

 

 

 

7,749

 

 

 

0.5

 

%

Patriot Holdings SCSp (dba Corza Health, Inc.)(18)(20)

 

Class A Units

 

8.00% PIK

 

N/A

 

 

1,653

 

 

 

1,759

 

 

 

1,759

 

 

 

0.1

 

%

Patriot Holdings SCSp (dba Corza Health, Inc.)(18)(20)(21)

 

Class B Units

 

N/A

 

N/A

 

 

22,767

 

 

 

44

 

 

 

258

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

 

8,504

 

 

 

9,766

 

 

 

0.6

 

%

Healthcare providers and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KOBHG Holdings, L.P. (dba OB Hospitalist)(18)(20)(21)

 

LP Interest

 

N/A

 

N/A

 

 

3,017

 

 

 

3,017

 

 

 

3,017

 

 

 

0.2

 

%

Restore OMH Intermediate Holdings, Inc.(18)(20)

 

Senior Preferred Stock

 

13.00% PIK

 

N/A

 

 

381

 

 

 

4,261

 

 

 

4,251

 

 

 

0.3

 

%

 

 

 

 

 

 

 

 

 

 

 

 

7,278

 

 

 

7,268

 

 

 

0.5

 

%

Human resource support services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunshine Software Holdings, Inc. (dba Cornerstone OnDemand)(18)(20)

 

Series A Preferred Stock

 

10.50% PIK

 

N/A

 

 

12,750

 

 

 

12,717

 

 

 

12,710

 

 

 

0.8

 

%

 

 

 

39

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,717

 

 

 

12,710

 

 

 

0.8

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evolution Parent, LP (dba SIAA)(18)(20)(21)

 

LP Interest

 

N/A

 

N/A

 

 

8,919

 

 

 

892

 

 

 

892

 

 

 

0.1

 

%

GrowthCurve Capital Sunrise Co-Invest LP (dba Brightway)(18)(20)(21)

 

LP Interest

 

N/A

 

N/A

 

 

421

 

 

 

422

 

 

 

421

 

 

 

—

 

%

PCF Holdco, LLC (dba PCF Insurance Services)(18)(20)(21)

 

Class A Units

 

N/A

 

N/A

 

 

2,757,106

 

 

 

6,992

 

 

 

6,992

 

 

 

0.4

 

%

PCF Holdco, LLC (dba PCF Insurance Services)(18)(20)(21)

 

Class A Warrants

 

N/A

 

N/A

 

 

1,013,666

 

 

 

2,571

 

 

 

2,571

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

 

 

 

10,877

 

 

 

10,876

 

 

 

0.7

 

%

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BCTO WIW Holdings, Inc. (dba When I Work)(18)(20)(21)

 

Class A Common Stock

 

N/A

 

N/A

 

 

57,000

 

 

 

5,700

 

 

 

5,700

 

 

 

0.3

 

%

Brooklyn Lender Co-Invest 2, L.P. (dba Boomi)(18)(20)(21)

 

Common Units

 

N/A

 

N/A

 

 

1,729,439

 

 

 

1,729

 

 

 

1,729

 

 

 

0.1

 

%

Thunder Topco L.P. (dba Vector Solutions)(18)(20)(21)

 

Common Units

 

N/A

 

N/A

 

 

2,138,653

 

 

 

2,139

 

 

 

2,524

 

 

 

0.2

 

%

MessageBird Holding B.V.(16)(18)(20)(21)

 

Extended Series C Warrants

 

N/A

 

N/A

 

 

25,540

 

 

 

157

 

 

 

157

 

 

 

—

 

%

WMC Bidco, Inc. (dba West Monroe)(18)(20)

 

Senior Preferred Stock

 

11.25% PIK

 

N/A

 

 

33,385

 

 

 

32,494

 

 

 

32,467

 

 

 

1.9

 

%

 

 

 

 

 

 

 

 

 

 

 

 

42,219

 

 

 

42,577

 

 

 

2.5

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gloves Holdings, LP (dba Protective Industrial Products)(18)(20)(21)

 

LP Interest

 

N/A

 

N/A

 

 

700

 

 

 

700

 

 

 

784

 

 

 

—

 

%

 

 

 

40

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Company(1)(2)(23)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

Amortized Cost(3)(4)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

700

 

 

 

784

 

 

 

—

 

%

Total non-controlled/non-affiliated portfolio company equity investments

 

 

 

 

 

 

 

 

 

 

154,334

 

 

 

156,886

 

 

 

9.4

 

%

Total Investments

 

 

 

 

 

 

 

 

 

$

2,889,829

 

 

$

2,897,037

 

 

 

173.4

 

%

________________

(1)
Certain portfolio company investments are subject to contractual restrictions on sales.
(2)
Unless otherwise indicated, all investments are considered Level 3 investments.
(3)
The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.
(4)
As of December 31, 2021, the net estimated unrealized gain for U.S. federal income tax purposes was $9.4 million based on a tax cost basis of $2.9 billion. As of December 31, 2021, the estimated aggregate gross unrealized loss for U.S. federal income tax purposes was $1.0 million and the estimated aggregate gross unrealized gain for U.S. federal income tax purposes was $10.4 million.
(5)
Loan contains a variable rate structure and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three-, six-, or twelve-month LIBOR), Euro Interbank Offered Rate (“EURIBOR” or “E”), British pound sterling LIBOR (“GBPLIBOR” or “G”), Sterling Overnight Interbank Average Rate ("SONIA" or "S") or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate ("Prime" or "P")), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.
(6)
The interest rate on these loans is subject to 1 month LIBOR, which as of December 31, 2021 was 0.10%.
(7)
The interest rate on these loans is subject to 3 month LIBOR, which as of December 31, 2021 was 0.21%.
(8)
The interest rate on these loans is subject to 6 month LIBOR, which as of December 31, 2021 was 0.34%.
(9)
The interest rate on these loans is subject to Prime, which as of December 31, 2021 was 3.25%.
(10)
The interest rate on these loans is subject to SONIA, which as of December 31, 2021 was 0.19%.
(11)
The interest rate on these loans is subject to 6 month GBPLIBOR, which as of December 31, 2021 was 0.47%.
(12)
The interest rate on this loan is subject to 6 month EURIBOR, which as of December 31, 2021 was (0.55)%.
(13)
Position or portion thereof is an unfunded loan or equity commitment. See Note 7 “Commitments and Contingencies”.
(14)
The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.
(15)
The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.
(16)
This portfolio company is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of total assets. As of December 31, 2021, non-qualifying assets represented 10.9% of total assets as calculated in accordance with the regulatory requirements.
(17)
Level 2 investment.
(18)
Represents co-investment made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company relies on from the U.S. Securities and Exchange Commission. See Note 3 “Agreements and Related Party Transactions.”
(19)
We invest in this portfolio company through underlying blocker entities Hercules Blocker 1 LLC, Hercules Blocker 2 LLC, Hercules Blocker 3 LLC, Hercules Blocker 4 LLC, and Hercules Blocker 5 LLC.
(20)
Security acquired in transaction exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), and may be deemed to be “restricted securities” under the Securities Act. As of December 31, 2021, the aggregate fair value of these securities is $156.9 million or 9.4% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

 

41

Owl Rock Capital Corporation III

Consolidated Schedule of Investments

as of December 31, 2021

(Amounts in thousands, except share amounts)

 

Portfolio Company

 

Investment

 

Acquisition Date

ASP Conair Holdings LP

 

Class A Units

 

May 17, 2021

BCTO WIW Holdings, Inc. (dba When I Work)

 

Class A Common Stock

 

November 2, 2021

Brooklyn Lender Co-Invest 2, L.P. (dba Boomi)

 

Common Units

 

October 1, 2021

CD&R Value Building Partners I, L.P. (dba Belron)

 

LP Interest

 

December 17, 2021

Denali Holding, LP (dba Summit Companies)

 

Class A Units

 

September 15, 2021

Evolution Parent, LP (dba SIAA)

 

LP Interest

 

April 30, 2021

Gloves Holdings, LP (dba Protective Industrial Products)

 

LP Interest

 

December 29, 2020

GrowthCurve Capital Sunrise Co-Invest LP (dba Brightway)

 

LP Interest

 

December 16, 2021

Hercules Buyer, LLC (dba The Vincit Group)

 

Common Units

 

December 15, 2020

KOBHG Holdings, L.P. (dba OB Hospitalist)

 

LP Interest

 

September 27, 2021

KPCI Holdings, LP

 

LP Interest

 

November 30, 2020

MessageBird Holding B.V.

 

Extended Series C Warrants

 

May 5, 2021

Metis HoldCo, Inc. (dba Mavis Tire Express Services)

 

Series A Convertible Preferred Stock

 

May 4, 2021

Patriot Holdings SCSp (dba Corza Health, Inc.)

 

Class A Units

 

January 29, 2021

Patriot Holdings SCSp (dba Corza Health, Inc.)

 

Class B Units

 

January 29, 2021

PCF Holdco, LLC (dba PCF Insurance Services)

 

Class A Units

 

November 1, 2021

PCF Holdco, LLC (dba PCF Insurance Services)

 

Class A Warrants

 

November 1, 2021

Restore OMH Intermediate Holdings, Inc.

 

Senior Preferred Stock

 

December 9, 2020

Skyline Holdco B, Inc. (dba Dodge Data & Analytics)

 

Series A Preferred Stock

 

April 14, 2021

Sunshine Software Holdings, Inc. (dba Cornerstone OnDemand)

 

Series A Preferred Stock

 

October 15, 2021

Thunder Topco L.P. (dba Vector Solutions)

 

Common Units

 

June 30, 2021

WMC Bidco, Inc. (dba West Monroe)

 

Senior Preferred Stock

 

November 9, 2021
(21)
Investment is non-income producing.
(22)
Loan contains a fixed-rate structure.
(23)
Unless otherwise indicated, the Company’s portfolio companies are pledged as collateral supporting the amounts outstanding under the Revolving Credit Facility, SPV Asset Facility I and SPV Asset Facility II. See Note 6 “Debt”.
(24)
Investment is not pledged as collateral for the credit facilities.

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

42

 

Owl Rock Capital Corporation III

Consolidated Statements of Changes in Net Assets

(Amounts in thousands)

(Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

 

2022

 

 

2021

 

 

Increase (Decrease) in Net Assets Resulting from Operations

 

 

 

 

 

 

 

Net investment income (loss)

 

$

40,930

 

 

$

7,040

 

 

Net change in unrealized gain (loss)

 

 

(15,507

)

 

 

1,563

 

 

Net realized gain (loss)

 

 

884

 

 

 

215

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

26,307

 

 

 

8,818

 

 

Distributions

 

 

 

 

 

 

 

Distributions declared from earnings

 

 

(36,790

)

 

 

(6,647

)

 

Net Decrease in Net Assets Resulting from Shareholders' Distributions

 

 

(36,790

)

 

 

(6,647

)

 

Capital Share Transactions

 

 

 

 

 

 

 

Reinvestment of distributions

 

 

5,751

 

 

 

440

 

 

Net Increase in Net Assets Resulting from Capital Share Transactions

 

 

5,751

 

 

 

440

 

 

Total Increase (Decrease) in Net Assets

 

 

(4,732

)

 

 

2,611

 

 

Net Assets, at beginning of period

 

 

1,668,298

 

 

 

286,454

 

 

Net Assets, at end of period

 

$

1,663,566

 

 

$

289,065

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

43

 

Owl Rock Capital Corporation III

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

 

2022

 

 

2021

 

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

$

26,307

 

 

$

8,818

 

 

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:

 

 

 

 

 

 

 

Purchases of investments, net

 

 

(112,092

)

 

 

(129,209

)

 

Proceeds from investments and investment repayments, net

 

 

80,195

 

 

 

41,301

 

 

Net amortization of discount on investments

 

 

(2,270

)

 

 

(966

)

 

Payment-in-kind interest

 

 

(5,549

)

 

 

(1,271

)

 

Payment-in-kind dividends

 

 

(2,139

)

 

 

(173

)

 

Net change in unrealized (gain) loss on investments

 

 

15,500

 

 

 

(1,784

)

 

Net change in unrealized (gain) loss on translation of assets and liabilities in foreign currencies

 

 

7

 

 

 

221

 

 

Net realized (gain) loss on investments

 

 

(869

)

 

 

(22

)

 

Amortization of debt issuance costs

 

 

740

 

 

 

337

 

 

Amortization of offering costs

 

 

16

 

 

 

125

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

(Increase) decrease in interest receivable

 

 

(1,548

)

 

 

(43

)

 

(Increase) decrease in prepaid expenses and other assets

 

 

38

 

 

 

—

 

 

Increase (decrease) in management fee payable

 

 

864

 

 

 

329

 

 

Increase (decrease) in payables to affiliates

 

 

(428

)

 

 

(391

)

 

Increase (decrease) in payables for investments purchased

 

 

—

 

 

 

1,803

 

 

Increase (decrease) in accrued expenses and other liabilities

 

 

3,982

 

 

 

(82

)

 

Net cash provided by (used in) operating activities

 

 

2,754

 

 

 

(81,007

)

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Borrowings on debt

 

 

181,000

 

 

 

219,927

 

 

Payments on debt

 

 

(140,000

)

 

 

(134,000

)

 

Debt issuance costs

 

 

(4,437

)

 

 

(11

)

 

Proceeds from issuance of common shares

 

 

—

 

 

 

3,409

 

 

Offering costs paid

 

 

(4

)

 

 

(10

)

 

Cash distributions paid to shareholders

 

 

(23,974

)

 

 

(1,658

)

 

Net cash provided by (used in) financing activities

 

 

12,585

 

 

 

87,657

 

 

Net increase (decrease) in cash

 

 

15,339

 

 

 

6,650

 

 

Cash, beginning of period

 

 

27,245

 

 

 

82,612

 

 

Cash, end of period

 

$

42,584

 

 

$

89,262

 

 

 

 

 

 

 

 

 

 

Supplemental and Non-Cash Information

 

 

 

 

 

 

 

Interest expense paid

 

$

4,491

 

 

$

925

 

 

Distributions declared during the period

 

$

36,790

 

 

$

6,647

 

 

Reinvestment of distributions during the period

 

$

5,751

 

 

$

440

 

 

Distribution payable

 

$

36,790

 

 

$

6,647

 

 

Excise taxes paid

 

$

228

 

 

$

8

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

44

 

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Organization

Owl Rock Capital Corporation III (the “Company”) is a Maryland corporation formed on January 27, 2020. The Company was formed primarily to originate and make loans to, and make debt and equity investments in middle-market companies based primarily in the United States. The Company invests in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.

The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes, the Company is treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Because the Company has elected to be regulated as a BDC and qualifies as a RIC under the Code, the Company’s portfolio is subject to diversification and other requirements.

On April 24, 2020, the Company formed a wholly-owned subsidiary, OR Lending III LLC, a Delaware limited liability company, which holds a California finance lenders license. OR Lending III LLC makes loans to borrowers headquartered in California. From time to time the Company may form wholly-owned subsidiaries to facilitate the normal course of business.

Owl Rock Diversified Advisors LLC (the “Adviser”) serves as the Company’s investment adviser. The Adviser is registered with the Securities and Exchange Commission (“SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), an indirect subsidiary of Blue Owl Capital Inc. (“Blue Owl”) (NYSE: OWL) and part of Owl Rock, a division of Blue Owl focused on direct lending. Blue Owl consists of three divisions: (1) Owl Rock, which focuses on direct lending, (2) Dyal, which focuses on providing capital to institutional alternative asset managers and (3) Oak Street, which focuses on real estate strategies. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Adviser manages the day-to-day operations of, and provides investment advisory and management services to, the Company. As of April 1, 2022, the Owl Rock division of Blue Owl also includes a CLO business ("Wellfleet"), which was acquired from affiliates of Littlejohn & Co., LLC.

The Company conducts private offerings (the “Private Offering”) of its common shares to accredited investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended. At the closing of any Private Offering, each investor makes a capital commitment (a “Capital Commitment”) to purchase shares of the Company’s common stock pursuant to a subscription agreement (“Subscription Agreement”) entered into with the Company. Until the earlier of a Liquidity Event (as defined below) and the end of the Commitment Period (as defined below), investors are required to fund drawdowns to purchase shares of the Company’s common stock up to the amount of their respective Capital Commitment on an as-needed basis each time the Company delivers a drawdown notice to its investors. The initial closing of the Private Offering occurred on June 5, 2020 (the “Initial Closing”). During the Commitment Period (as defined below), the Adviser may, in its sole discretion, permit one or more additional closings (“Subsequent Closings”) as additional Capital Commitments are obtained (the conclusion of all Subsequent Closings, if any, the “Final Closing”). The “Commitment Period” will continue until the seven year anniversary of the Initial Closing. If the Company has not consummated a Liquidity Event (as defined below) by the end of the Commitment Period, subject to extension for two additional one-year periods, in the sole discretion of the Board, the Board (subject to any necessary shareholder approvals and applicable requirements of the Investment Company Act of 1940 (the “1940 Act”)) will use its commercially reasonable efforts to wind down and/or liquidate and dissolve the Company in an orderly manner. A “Liquidity Event” could include: (i) future quotation or listing of the Company’s securities on a national securities exchange (“Exchange Listing"); (ii) a transaction, including a merger, in which shareholders receive cash or shares of an entity, including an entity that is affiliated with the Company, and such shares are listed on a national securities exchange; or (iii) the sale of all or substantially all of the Company’s assets.

On June 17, 2020, the Company commenced its loan origination and investment activities contemporaneously with the initial drawdown from investors in the Private Offering. In June 2020, the Company made its first portfolio investment.

Note 2. Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. In the opinion of management, all adjustments considered necessary for the fair presentation of the consolidated financial statements have been included. The Company was initially capitalized on June 4, 2020 and commenced operations on June 5, 2020 with the initial closing of its Private Offering. The Company’s fiscal year ends on December 31.

 

45

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual amounts could differ from those estimates and such differences could be material.

Cash

Cash consists of deposits held at a custodian bank. Cash is carried at cost, which approximates fair value. The Company deposits its cash with highly-rated banking corporations and, at times, may exceed the insured limits under applicable law.

Investments at Fair Value

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of the Company’s investments, are valued at fair value as determined in good faith by the Board, based on, among other things, the input of the Adviser, the Company’s audit committee and independent third-party valuation firm(s) engaged at the direction of the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of the Company’s investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase or sale transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:

•
With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;
•
With respect to investments for which market quotations are not readily available, the valuation process begins with the independent valuation firm(s) providing a preliminary valuation of each investment to the Adviser’s valuation committee;
•
Preliminary valuation conclusions are documented and discussed with the Adviser’s valuation committee. Agreed upon valuation recommendations are presented to the Audit Committee;
•
The Audit Committee reviews the valuation recommendations and recommends values for each investment to the Board; and
•
The Board reviews the recommended valuations and determines the fair value of each investment.

The Company conducts this valuation process on a quarterly basis.

The Company applies Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and

 

46

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:

•
Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
•
Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
•
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Transfers between levels, if any, are recognized at the beginning of the period in which the transfer occurs. In addition to using the above inputs in investment valuations, the Company applies the valuation policy approved by its Board that is consistent with ASC 820. Consistent with the valuation policy, the Company evaluates the source of the inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (such as broker quotes), the Company subjects those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, the Company, or the independent valuation firm(s), reviews pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.

Rule 2a-5 under the 1940 Act was recently adopted by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act. The Company intends to comply with the new rule’s requirements on or before the compliance date in September 2022.

Foreign Currency

Foreign currency amounts are translated into U.S. dollars on the following basis:

•
cash, fair value of investments, outstanding debt, other assets and liabilities: at the spot exchange rate on the last business day of the period; and
•
purchases and sales of investments, borrowings and repayments of such borrowings, income and expenses: at the rates of exchange prevailing on the respective dates of such transactions.

The Company includes net changes in fair values on investments held resulting from foreign exchange rate fluctuations with the change in unrealized gains (losses) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations. The Company’s current approach to hedging the foreign currency exposure in its non-U.S. dollar denominated investments is primarily to borrow the par amount in local currency under the Company’s Revolving Credit Facility to fund these investments. Fluctuations arising from the translation of foreign currency borrowings are included with the net change in unrealized gains (losses) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations.

Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.

Interest and Dividend Income Recognition

Interest income is recorded on the accrual basis and includes amortization of discounts or premiums. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK interest and dividends represent accrued interest or dividends that are added to the principal amount or liquidation amount of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or at the occurrence of a liquidation event. Discounts and premiums to par value on securities purchased are amortized into interest income over the contractual life of the respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the amortization of discounts or

 

47

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. If at any point the Company believes PIK interest or dividends are not expected to be realized, the investment generating PIK interest or dividends will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest income. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of March 31, 2022, no investments are on non-accrual status.

Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

Other Income

From time to time, the Company may receive fees for services provided to portfolio companies. These fees are generally only available to the Company as a result of closing investments, are generally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned upon closing of the investment. The services that the Adviser provides vary by investment, but can include closing, work, diligence or other similar fees and fees for providing managerial assistance to the Company’s portfolio companies.

Organization Expenses

Costs associated with the organization of the Company are expensed as incurred. These expenses consist primarily of legal fees and other costs of organizing the Company.

Offering Expenses

Costs associated with the offering of common shares of the Company are capitalized as deferred offering expenses and are included in prepaid expenses and other assets in the Consolidated Statements of Assets and Liabilities and are amortized over a twelve-month period beginning with commencement of operations and any additional expenses for other offerings from incurrence. These expenses consist primarily of legal fees and other costs incurred in connection with the Company’s share offerings, the preparation of the Company’s registration statement, and registration fees.

Debt Issuance Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized utilizing the effective yield method, over the life of the related debt instrument. Debt issuance costs are presented on the Consolidated Statements of Assets and Liabilities as a direct deduction from the debt liability. In circumstances in which there is not an associated debt liability amount recorded in the consolidated financial statements when the debt issuance costs are incurred, such debt issuance costs will be reported on the Consolidated Statements of Assets and Liabilities as an asset until the debt liability is recorded.

Reimbursement of Transaction-Related Expenses

The Company may receive reimbursement for certain transaction-related expenses in pursuing investments. Transaction-related expenses, which are generally expected to be reimbursed by the Company’s portfolio companies, are typically deferred until the transaction is consummated and are recorded in prepaid expenses and other assets on the date incurred. The costs of successfully completed investments not otherwise reimbursed are borne by the Company and are included as a component of the investment’s cost basis.

Cash advances received in respect of transaction-related expenses are recorded as cash with an offset to accrued expenses and other liabilities. Accrued expenses and other liabilities are relieved as reimbursable expenses are incurred.

Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act. The Company has elected to be treated as a RIC under the Code beginning with its taxable year ending December 31, 2020 and intends to continue to qualify as a RIC. So long as the Company maintains its tax treatment as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or

 

48

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

capital gains that it distributes at least annually to its shareholders as dividends. Instead, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s investors and will not be reflected in the consolidated financial statements of the Company.

To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its shareholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. There were no material uncertain tax positions through December 31, 2021. The 2020 tax year remains subject to examination by U.S. federal, state and local tax authorities.

Distributions to Common Shareholders

Distributions to common shareholders are recorded on the record date. The amount to be distributed is determined by the Board and is generally based upon the earnings estimated by the Adviser. Net realized long-term capital gains, if any, would generally be distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company has adopted a dividend reinvestment plan that provides for reinvestment of any cash distributions on behalf of shareholders, unless a shareholder elects to receive cash. As a result, if the Board authorizes and declares a cash distribution, then the shareholders who have not “opted out” of the dividend reinvestment plan will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. The Company expects to use newly issued shares to implement the dividend reinvestment plan.

Consolidation

As provided under Regulation S-X and ASC Topic 946 - Financial Services - Investment Companies, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's wholly-owned subsidiaries in its consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

New Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848),” which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform (Topic 848),” which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022. ASU No. 2021-01 provides increased clarity as the Company continues to evaluate the transition of reference rates and is currently evaluating the impact of adopting ASU No. 2020-04 and 2021-01 on the consolidated financial statements.

Other than the aforementioned guidance, the Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying consolidated financial statements.

 

 

49

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

 

Note 3. Agreements and Related Party Transactions

Administration Agreement

The Company has entered into an amended and restated Administration Agreement (the “Administration Agreement”) with the Adviser. The Administration Agreement became effective on May 18, 2021 upon consummation of the transaction (the "Transaction") pursuant to which Owl Rock Capital Group, the parent of the Adviser (and a subsidiary of Owl Rock Capital Partners LP), and Dyal Capital Partners merged to form Blue Owl. The terms of the Administration Agreement are identical to the terms of the prior administration agreement. Under the terms of the Administration Agreement, the Adviser performs, or oversees the performance of, required administrative services, which include providing office space, equipment and office services, maintaining financial records, preparing reports to shareholders and reports filed with the SEC, and managing the payment of expenses and the performance of administrative and professional services rendered by others.

The Administration Agreement also provides that the Company reimburses the Adviser for certain organization costs incurred prior to the commencement of the Company’s operations, and for certain offering costs.

The Company reimburses the Adviser for services performed for it pursuant to the terms of the Administration Agreement. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and the Company will reimburse the Adviser for any services performed for it by such affiliate or third party.

Unless earlier terminated as described below, the Administration Agreement will remain in effect for two years from the date it first became effective, and will remain in effect from year to year thereafter if approved annually by (1) the vote of the Board or by the holders of a majority of the Company’s outstanding voting securities and, (2) the vote of a majority of the Company’s directors who are not “interested persons” of the Company, of the Adviser or of any of their respective affiliates, as defined in the 1940 Act (the "independent directors"). On May 3, 2022, the Board approved the continuation of the Administration Agreement. The Administration Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice, by the vote of a majority of the outstanding voting securities of the Company (as defined in the 1940 Act), or by the vote of a majority of the Board or by the Adviser.

No person who is an officer, director, or employee of the Adviser or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Adviser (or its affiliates) for an allocable portion of the compensation paid by the Adviser or its affiliates to the Company’s Chief Compliance Officer, Chief Financial Officer and their respective staffs (based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company). Directors who are not affiliated with the Adviser receive compensation for their services and reimbursement of expenses incurred to attend meetings.

For the three months ended March 31, 2022, the Company incurred expenses of approximately $0.5 million for costs and expenses reimbursable to the Adviser under the terms of the Administration Agreement. For the three months ended March 31, 2021, the Company incurred expenses of approximately $0.3 million for costs and expenses reimbursable to the Adviser under the terms of the Administration Agreement.

Investment Advisory Agreement

The Company has entered into an amended and restated Investment Advisory Agreement (the “Investment Advisory Agreement”) with the Adviser. The Investment Advisory Agreement became effective on May 18, 2021 upon consummation of the Transaction. The terms of the Investment Advisory Agreement are identical to the terms of the prior investment advisory agreement. Under the terms of the Investment Advisory Agreement, the Adviser is responsible for managing the Company’s business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring its investments, and monitoring its portfolio companies on an ongoing basis through a team of investment professionals.

The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to the Company are not impaired.

Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect for two years from the date it first became effective, and will remain in effect from year-to-year thereafter if approved annually by a majority of the Board or by the holders of a majority of the Company’s outstanding voting securities and, in each case, by a majority of independent directors. On May 3, 2022, the Board approved the continuation of the Investment Advisory Agreement.

 

50

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

The Investment Advisory Agreement will automatically terminate within the meaning of the 1940 Act and related SEC guidance and interpretations in the event of its assignment. In accordance with the 1940 Act, without payment of penalty, the Company may terminate the Investment Advisory Agreement with the Adviser upon 60 days’ written notice. The decision to terminate the agreement may be made by a majority of the Board or the shareholders holding a majority (as defined under the 1940 Act) of the outstanding shares of the Company’s common stock or the Adviser. In addition, without payment of penalty, the Adviser may generally terminate the Investment Advisory Agreement upon 60 days’ written notice.

From time to time, the Adviser may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Adviser for such amounts paid on its behalf. Amounts payable to the Adviser are settled in the normal course of business without formal payment terms.

Under the terms of the Investment Advisory Agreement, the Company will pay the Adviser a base management fee and may also pay to it certain incentive fees. The cost of both the management fee and the incentive fee will ultimately be borne by the Company’s shareholders.

The management fee is payable quarterly in arrears. Prior to an Exchange Listing, the management fee is payable at an annual rate of 0.50% of the Company’s average gross assets, excluding cash and cash equivalents but including assets purchased with borrowed amounts, at the end of the Company’s two most recently completed calendar quarters.

Following an Exchange Listing, the management fee is payable at an annual rate of (x) 1.50% of the Company’s average gross assets (excluding cash and cash equivalents but including assets purchased with borrowed amounts) that is above an asset coverage ratio of 200% calculated in accordance with Sections 18 and 61 of the 1940 Act and (y) 1.00% of the Company’s average gross assets (excluding cash and cash equivalents but including assets purchased with borrowed amounts) that is below an asset coverage ratio of 200% calculated in accordance with Sections 18 and 61 of the 1940 Act, in each case, at the end of the two most recently completed calendar quarters. The management fee for any partial month or quarter, as the case may be, will be appropriately prorated and adjusted for any share issuances or repurchases during the relevant calendar months or quarters, as the case may be.

For the three months ended March 31, 2022, management fees were $3.7 million. For the three months ended March 31, 2021, management fees were $543.0 thousand.

Pursuant to the Investment Advisory Agreement, the Adviser will not be entitled to an incentive fee prior to an Exchange Listing. Following an Exchange Listing, the incentive fee consists of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the incentive fee is based on the Company’s pre-incentive fee net investment income and a portion is based on the Company’s capital gains. The portion of the incentive fee based on pre-incentive fee net investment income will be calculated and payable quarterly in arrears commencing with the first calendar quarter following an Exchange Listing, and will equal 100% of the pre-incentive fee net investment income in excess of a 1.5% quarterly “hurdle rate,” until the Adviser has received 17.5% of the total pre-incentive fee net investment income for that calendar quarter and, for pre-incentive fee net investment income in excess of 1.82% quarterly, 17.5% of all remaining pre-incentive fee net investment income for that calendar quarter.

The second component of the incentive fee, the capital gains incentive fee, payable at the end of each calendar year in arrears, equals 17.5% of cumulative realized capital gains from the date on which an Exchange Listing, if any, becomes effective (the "Listing Date") to the end of each calendar year, less cumulative realized capital losses and unrealized capital depreciation from the Listing Date to the end of each calendar year, less the aggregate amount of any previously paid capital gains incentive fee for prior periods. The Company will accrue, but will not pay, a capital gains incentive fee with respect to unrealized appreciation because a capital gains incentive fee would be owed to the Adviser if the Company were to sell the relevant investment and realize a capital gain. The fees that are payable under the Investment Advisory Agreement for any partial period will be appropriately prorated. For the sole purpose of calculating the capital gains incentive fee, the cost basis as of the Listing Date for all of our investments made prior to the Listing Date will be equal to the fair market value of such investments as of the last day of the calendar quarter in which the Listing Date occurs; provided, however, that in no event will the capital gains incentive fee payable pursuant to the Investment Advisory Agreement be in excess of the amount permitted by the Advisers Act of 1940, as amended, including Section 205 thereof.

There were no performance based incentive fees on net investment income for the three months ended March 31, 2022. There were no performance based incentive fees on net investment income for the three months ended March 31, 2021.

There were no capital gains based incentive fees for the three months ended March 31, 2022. There were no capital gains based incentive fees for the three months ended March 31, 2021.

Dealer Manager Agreement; Placement Agent Agreement

 

51

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

On June 4, 2020, the Company and the Adviser entered into a dealer manager agreement (the “Dealer Manager Agreement”) with Blue Owl Securities LLC (formerly, Owl Rock Capital Securities LLC) (“Blue Owl Securities”), pursuant to which Blue Owl Securities and certain participating broker-dealers will solicit Capital Commitments. In addition, the Company has entered into a placement agent agreement (the “Placement Agent Agreement”) with Blue Owl Securities pursuant to which employees of Blue Owl Securities may conduct placement activities.

Blue Owl Securities, an affiliate of Blue Owl, is registered as a broker-dealer with the SEC and is a member of the Financial Industry Regulatory Authority. Fees paid pursuant to these agreements will be paid by the Adviser.

Affiliated Transactions

The Company may be prohibited under the 1940 Act from participating in certain transactions with its affiliates without prior approval of the directors who are not interested persons, and in some cases, the prior approval of the SEC. The Company relies on exemptive relief that has been granted to Owl Rock Capital Advisors LLC (“ORCA”) and its affiliates to co-invest with other funds managed by the Adviser or its affiliates, in a manner consistent with the Company’s investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. Pursuant to such exemptive relief, the Company generally is permitted to co-invest with certain of its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Board make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and its shareholders and do not involve overreaching of the Company or its shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of the Company’s shareholders and is consistent with its investment objective and strategies, (3) the investment by its affiliates would not disadvantage the Company, and the Company’s participation would not be on a basis different from or less advantageous than that on which its affiliates are investing, and (4) the proposed investment by the Company would not benefit the Adviser or its affiliates or any affiliated person of any of them (other than the parties to the transaction), except to the extent permitted by the exemptive relief and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act.

The Adviser is affiliated with ORCA, Owl Rock Technology Advisors LLC (“ORTA”), Owl Rock Technology Advisors II LLC ("ORTA II") and Owl Rock Capital Private Fund Advisors LLC (“ORPFA” and together with ORCA, ORTA, ORTA II and the Adviser, the “Owl Rock Advisers”), which are also investment advisers. The Owl Rock Advisers are indirect affiliates of Blue Owl and comprise part of “Owl Rock,” a division of Blue Owl focused on direct lending. The Owl Rock Advisers’ allocation policy seeks to ensure equitable allocation of investment opportunities over time between the Company and other funds managed by the Adviser or its affiliates. As a result of exemptive relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolio of other funds managed by the Adviser or its affiliates that could avail themselves of the exemptive relief and that have an investment objective similar to the Company’s.

License Agreement

The Company has entered into a license agreement (the “License Agreement”), pursuant to which an affiliate of Blue Owl has granted the Company a non-exclusive license to use the name “Owl Rock.” Under the License Agreement, the Company has a right to use the Owl Rock name for so long as the Adviser or one of its affiliates remains the Company’s investment adviser. Other than with respect to this limited license, the Company will have no legal right to the “Owl Rock” name or logo.

 

Note 4. Investments

Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Under the 1940 Act, "non-affiliated investments" are defined as investments that are neither controlled investments nor affiliated investments. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled affiliated investments is contained in the accompanying consolidated financial statements, including the consolidated schedule of investments. The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are non-controlled non-affiliated, non-controlled affiliated or controlled affiliated investments.

Investments at fair value and amortized cost consisted of the following as of March 31, 2022 and December 31, 2021:

 

 

52

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

($ in thousands)

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

 

First-lien senior secured debt investments

 

$

2,321,498

 

 

$

2,311,913

 

 

$

2,282,500

 

 

$

2,285,599

 

 

Second-lien senior secured debt investments

 

 

407,674

 

 

 

406,551

 

 

 

406,308

 

 

 

407,932

 

 

Unsecured debt investments

 

 

48,699

 

 

 

47,214

 

 

 

46,687

 

 

 

46,620

 

 

Preferred equity investments

 

 

82,150

 

 

 

81,700

 

 

 

82,903

 

 

 

83,788

 

 

Common equity investments

 

 

72,532

 

 

 

75,477

 

 

 

71,431

 

 

 

73,098

 

 

Total Investments

 

$

2,932,553

 

 

$

2,922,855

 

 

$

2,889,829

 

 

$

2,897,037

 

 

The industry composition of investments based on fair value as of March 31, 2022 and December 31, 2021 was as follows:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

Advertising and media

 

 

2.8

 

%

 

2.8

 

%

Aerospace and defense

 

 

0.5

 

 

 

0.5

 

 

Automotive

 

 

2.3

 

 

 

2.3

 

 

Buildings and real estate

 

 

3.0

 

 

 

3.4

 

 

Business services

 

 

6.4

 

 

 

6.8

 

 

Chemicals

 

 

2.8

 

 

 

2.9

 

 

Consumer products

 

 

3.5

 

 

 

3.8

 

 

Containers and packaging

 

 

3.6

 

 

 

3.6

 

 

Distribution

 

 

2.0

 

 

 

1.5

 

 

Education

 

 

0.7

 

 

 

0.7

 

 

Financial services

 

 

6.3

 

 

 

6.3

 

 

Food and beverage

 

 

4.2

 

 

 

3.5

 

 

Healthcare equipment and services

 

 

3.5

 

 

 

3.5

 

 

Healthcare providers and services

 

 

6.8

 

 

 

7.6

 

 

Healthcare technology

 

 

7.2

 

 

 

6.9

 

 

Household products

 

 

0.8

 

 

 

0.8

 

 

Human resource support services

 

 

4.3

 

 

 

4.4

 

 

Infrastructure and environmental services

 

 

-

 

 

 

-

 

 

Insurance

 

 

10.1

 

 

 

10.1

 

 

Internet software and services

 

 

14.9

 

 

 

14.4

 

 

Leisure and entertainment

 

 

2.4

 

 

 

2.4

 

 

Manufacturing

 

 

3.4

 

 

 

3.5

 

 

Professional services

 

 

2.3

 

 

 

2.2

 

 

Specialty retail

 

 

5.6

 

 

 

5.5

 

 

Telecommunications

 

 

0.3

 

 

 

0.3

 

 

Transportation

 

 

0.3

 

 

 

0.3

 

 

Total

 

 

100.0

 

%

 

100.0

 

%

 

The geographic composition of investments based on fair value as of March 31, 2022 and December 31, 2021 was as follows:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

United States:

 

 

 

 

 

 

 

Midwest

 

 

21.0

 

%

 

20.7

 

%

Northeast

 

 

17.0

 

 

 

16.9

 

 

South

 

 

29.4

 

 

 

30.7

 

 

West

 

 

24.2

 

 

 

23.3

 

 

International

 

 

8.4

 

 

 

8.4

 

 

Total

 

 

100.0

 

%

 

100.0

 

%

 

Note 5. Fair Value of Investments

Investments

The following tables present the fair value hierarchy of investments as of March 31, 2022 and December 31, 2021:

 

53

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

 

 

 

Fair Value Hierarchy as of March 31, 2022

 

($ in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

First-lien senior secured debt investments

 

$

—

 

 

$

7,369

 

 

$

2,304,544

 

 

$

2,311,913

 

Second-lien senior secured debt investments

 

 

—

 

 

 

47,925

 

 

 

358,626

 

 

 

406,551

 

Unsecured debt investments

 

 

—

 

 

 

—

 

 

 

47,214

 

 

 

47,214

 

Preferred equity investments

 

 

—

 

 

 

—

 

 

 

81,700

 

 

 

81,700

 

Common equity investments

 

 

—

 

 

 

—

 

 

 

75,477

 

 

 

75,477

 

Total Investments at fair value

 

$

—

 

 

$

55,294

 

 

$

2,867,561

 

 

$

2,922,855

 

 

 

 

Fair Value Hierarchy as of December 31, 2021

 

($ in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

First-lien senior secured debt investments

 

$

—

 

 

$

7,416

 

 

$

2,278,183

 

 

$

2,285,599

 

Second-lien senior secured debt investments

 

 

—

 

 

 

19,941

 

 

 

387,991

 

 

 

407,932

 

Unsecured debt investments

 

 

—

 

 

 

—

 

 

 

46,620

 

 

 

46,620

 

Preferred equity investments

 

 

—

 

 

 

—

 

 

 

83,788

 

 

 

83,788

 

Common equity investments

 

 

—

 

 

 

—

 

 

 

73,098

 

 

 

73,098

 

Total Investments at fair value

 

$

—

 

 

$

27,357

 

 

$

2,869,680

 

 

$

2,897,037

 

The following tables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three months ended March 31, 2022 and 2021:

 

 

 

As of and for the Three Months Ended March 31, 2022

 

($ in thousands)

 

First-lien senior secured debt investments

 

 

Second-lien senior secured debt investments

 

 

Unsecured debt investments

 

 

Preferred equity investments

 

 

Common equity investments

 

 

Total

 

Fair value, beginning of period

 

$

2,278,183

 

 

$

387,991

 

 

$

46,620

 

 

$

83,788

 

 

$

73,098

 

 

$

2,869,680

 

Purchases of investments, net

 

 

107,470

 

 

 

980

 

 

 

988

 

 

 

1,960

 

 

 

694

 

 

 

112,092

 

Payment-in-kind

 

 

3,859

 

 

 

692

 

 

 

998

 

 

 

2,102

 

 

 

37

 

 

 

7,688

 

Proceeds from investments, net

 

 

(74,274

)

 

 

—

 

 

 

—

 

 

 

(5,464

)

 

 

—

 

 

 

(79,738

)

Net realized gains (losses)

 

 

37

 

 

 

—

 

 

 

—

 

 

 

831

 

 

 

—

 

 

 

868

 

Net change in unrealized gain (loss)

 

 

(12,645

)

 

 

(2,187

)

 

 

(1,415

)

 

 

(1,335

)

 

 

1,280

 

 

 

(16,302

)

Net amortization of discount on investments

 

 

1,914

 

 

 

113

 

 

 

23

 

 

 

186

 

 

 

—

 

 

 

2,236

 

Transfers between investment types

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(368

)

 

 

368

 

 

 

—

 

Transfers into (out of) Level 3(1)

 

 

—

 

 

 

(28,963

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(28,963

)

Fair value, end of period

 

$

2,304,544

 

 

$

358,626

 

 

$

47,214

 

 

$

81,700

 

 

$

75,477

 

 

$

2,867,561

 

________________

(1)
Transfers between levels, if any, are recognized at the beginning of the period in which the transfers occur.

 

 

 

As of and for the Three Months Ended March 31, 2021

 

($ in thousands)

 

First-lien senior secured debt investments

 

 

Second-lien senior secured debt investments

 

 

Unsecured debt investments

 

 

Preferred equity investments(2)

 

 

Common equity investments(2)

 

 

Total

 

Fair value, beginning of period

 

$

304,900

 

 

$

88,048

 

 

$

20,308

 

 

$

3,693

 

 

$

5,851

 

 

$

422,800

 

Purchases of investments, net

 

 

96,915

 

 

 

—

 

 

 

25,397

 

 

 

154

 

 

 

1,387

 

 

 

123,853

 

Proceeds from investments, net

 

 

(35,468

)

 

 

(4,641

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(40,109

)

Net change in unrealized gain (loss)

 

 

1,624

 

 

 

312

 

 

 

(211

)

 

 

(8

)

 

 

—

 

 

 

1,717

 

Net realized gains (losses)

 

 

22

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

22

 

Net amortization of discount on investments

 

 

819

 

 

 

123

 

 

 

12

 

 

 

4

 

 

 

—

 

 

 

958

 

Transfers into (out of) Level 3(1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Fair value, end of period

 

$

368,812

 

 

$

83,842

 

 

$

45,506

 

 

$

3,843

 

 

$

7,238

 

 

$

509,241

 

 

 

54

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

________________

(1)
Transfers between levels, if any, are recognized at the beginning of the period in which the transfers occur.
(2)
As of March 31, 2021, Preferred and Common equity investments were reported in aggregate as Equity investments.

The following table presents information with respect to net change in unrealized gains (losses) on investments for which Level 3 inputs were used in determining the fair value that are still held by the Company for the three months ended March 31, 2022 and 2021:

 

($ in thousands)

 

Net change in unrealized gain (loss) for the Three Months Ended March 31, 2022 on Investments Held at March 31, 2022

 

 

Net change in unrealized gain (loss) for the Three Months Ended March 31, 2021 on Investments Held at March 31, 2021

 

 

First-lien senior secured debt investments

 

$

(12,153

)

 

$

2,255

 

 

Second-lien senior secured debt investments

 

 

(1,978

)

 

 

311

 

 

Unsecured debt investments

 

 

(1,415

)

 

 

(211

)

 

Preferred equity investments(1)

 

 

(1,285

)

 

 

(8

)

 

Common equity investments(1)

 

 

1,593

 

 

 

—

 

 

Total Investments

 

$

(15,238

)

 

$

2,347

 

 

________________

(1)
As of March 31, 2021, Preferred and Common equity investments were reported in aggregate as Equity investments.

The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of March 31, 2022 and December 31, 2021. The weighted average range of unobservable inputs is based on fair value

 

55

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

of investments. The tables are not intended to be all-inclusive but instead capture the significant unobservable inputs relevant to the Company’s determination of fair value.

 

 

 

As of March 31, 2022

($ in thousands)

 

Fair Value

 

 

Valuation Technique

 

Unobservable Input

 

Range (Weighted Average)

 

Impact to Valuation from an Increase in Input

First-lien senior secured debt investments

 

$

2,258,660

 

 

Yield Analysis

 

Market Yield

 

7.4% - 15.0% (10.0%)

 

Decrease

 

 

 

45,884

 

 

Recent Transaction

 

Transaction Price

 

81.2% - 100.0% (97.9%)

 

Increase

Second-lien senior secured debt investments

 

$

357,646

 

 

Yield Analysis

 

Market Yield

 

9.7% - 14.7% (11.1%)

 

Decrease

 

 

 

980

 

 

Recent Transaction

 

Transaction Price

 

98.0%

 

Increase

Unsecured debt investments(1)

 

$

44,909

 

 

Yield Analysis

 

Market Yield

 

8.1% - 10.5% (9.4%)

 

Decrease

 

 

 

1,056

 

 

Market Approach

 

EBITDA Multiple

 

14.8x

 

Increase

 

 

 

994

 

 

Recent Transaction

 

Transaction Price

 

99.3%

 

Increase

Preferred equity investments

 

$

79,704

 

 

Yield Analysis

 

Market Yield

 

12.1% - 13.0% (12.5%)

 

Decrease

 

 

 

1,996

 

 

Recent Transaction

 

Transaction Price

 

98.0% - 100.0% (98.0%)

 

Increase

Common equity investments

 

$

66,929

 

 

Market Approach

 

EBITDA Multiple

 

7.8x - 23.8x (17.6x)

 

Increase

 

 

 

100

 

 

Market Approach

 

Gross Profit Multiple

 

27.0x

 

Increase

 

 

 

7,429

 

 

Market Approach

 

Last Quarter Annualized Recurring Revenue Multiple

 

9.0x - 11.5x (9.6x)

 

Increase

 

 

 

1,019

 

 

Recent Transaction

 

Transaction Price

 

100.0%

 

Increase

________________

(1)
Excludes Level 3 investments with a fair value of $255.0 thousand, which the Company valued using indicative bid prices obtained from brokers.

 

 

56

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

 

 

As of December 31, 2021

($ in thousands)

 

Fair Value

 

 

Valuation Technique

 

Unobservable Input

 

Range (Weighted Average)

 

Impact to Valuation from an Increase in Input

First-lien senior secured debt investments

 

$

1,650,640

 

 

Yield Analysis

 

Market Yield

 

6.5% - 12.4% (8.3%)

 

Decrease

 

 

 

627,543

 

 

Recent Transaction

 

Transaction Price

 

90.5% - 99.4% (98.2%)

 

Increase

Second-lien senior secured debt investments(1)

 

$

213,824

 

 

Yield Analysis

 

Market Yield

 

6.5% - 10.7% (9.2%)

 

Decrease

 

 

 

161,554

 

 

Recent Transaction

 

Transaction Price

 

98.0% - 99.0% (98.7%)

 

Increase

Unsecured debt investments(2)

 

$

45,314

 

 

Yield Analysis

 

Market Yield

 

7.2% - 9.4% (8.4%)

 

Decrease

 

 

 

1,056

 

 

Market Approach

 

EBITDA Multiple

 

14.8x

 

Increase

Preferred equity investments

 

$

37,896

 

 

Yield Analysis

 

Market Yield

 

11.4% - 14.6% (11.8%)

 

Decrease

 

 

 

45,177

 

 

Recent Transaction

 

Transaction Price

 

97.3% - 97.5% (97.3%)

 

Increase

 

 

 

715

 

 

Market Approach

 

EBITDA Multiple

 

9.3x

 

Increase

Common equity investments

 

$

22,528

 

 

Market Approach

 

EBITDA Multiple

 

7.6x - 24.0x (17.1x)

 

Increase

 

 

 

157

 

 

Market Approach

 

Gross Profit Multiple

 

27.0x

 

Increase

 

 

 

50,413

 

 

Recent Transaction

 

Transaction Price

 

100.0%

 

Increase

________________

(1)
Excludes Level 3 investments with a fair value of $12.6 million, which the Company valued using indicative bid prices obtained from brokers.
(2)
Excludes Level 3 investment with a fair value of $250.0 thousand, which the Company valued using indicative bid prices obtained from brokers.

The Company typically determines the fair value of its performing Level 3 debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to the expected life, portfolio company performance since close, and other terms and risks associated with an investment. Among other factors, a determinant of risk is the amount of leverage used by the portfolio company relative to its total enterprise value, and the rights and remedies of the Company’s investment within the portfolio company’s capital structure.

Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 debt investments primarily include current market yields, including relevant market indices, but may also include quotes from brokers, dealers, and pricing services as indicated by comparable investments. For the Company’s Level 3 equity investments, a market approach, based on comparable publicly-traded company and comparable market transaction multiples of revenues, earnings before income taxes, depreciation and amortization (“EBITDA”) or some combination thereof and comparable market transactions are typically used.

Debt Not Carried at Fair Value

Fair value is estimated by discounting remaining payments using applicable current market rates, which take into account changes in the Company’s marketplace credit ratings, or market quotes, if available. The following table presents the carrying and fair values of the Company’s debt obligations as of March 31, 2022 and December 31, 2021:

 

 

57

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

($ in thousands)

 

Net Carrying
Value(1)

 

 

Fair Value

 

 

Net Carrying
Value(2)

 

 

Fair Value

 

 

Subscription Credit Facility

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

Revolving Credit Facility

 

 

156,174

 

 

 

156,174

 

 

 

211,373

 

 

 

211,373

 

 

SPV Asset Facility I

 

 

568,717

 

 

 

568,717

 

 

 

572,676

 

 

 

572,676

 

 

SPV Asset Facility II

 

 

227,421

 

 

 

227,421

 

 

 

132,286

 

 

 

132,286

 

 

2027 Notes

 

 

321,071

 

 

 

287,625

 

 

 

321,151

 

 

 

316,875

 

 

Promissory Note

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

Total Debt

 

$

1,273,383

 

 

$

1,239,937

 

 

$

1,237,486

 

 

$

1,233,210

 

 

________________

(1)
The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, and 2027 Notes are presented net of deferred financing costs of $4.1 million, $6.3 million, $2.6 million, and $3.9 million, respectively.
(2)
The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, and 2027 Notes are presented net of deferred financing costs of $4.3 million,$2.3 million, $2.7 million, and $3.8 million, respectively.

The following table presents fair value measurements of the Company’s debt obligations as of March 31, 2022 and December 31, 2021:

 

($ in thousands)

 

March 31, 2022

 

 

December 31, 2021

 

 

Level 1

 

$

—

 

 

$

—

 

 

Level 2

 

 

287,625

 

 

 

316,875

 

 

Level 3

 

 

952,312

 

 

 

916,335

 

 

Total Debt

 

$

1,239,937

 

 

$

1,233,210

 

 

Financial Instruments Not Carried at Fair Value

As of March 31, 2022 and December 31, 2021, the carrying amounts of the Company’s assets and liabilities, other than investments at fair value and debt, approximate fair value due to their short maturities.

 

Note 6. Debt

In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2022 and December 31, 2021, the Company’s asset coverage was 228% and 233%, respectively.

Debt obligations consisted of the following as of March 31, 2022 and December 31, 2021:

 

 

 

March 31, 2022

 

($ in thousands)

 

Aggregate Principal Committed

 

 

Outstanding Principal

 

 

Amount Available(1)

 

 

Net Carrying Value(2)

 

Revolving Credit Facility(3)

 

$

450,000

 

 

$

160,250

 

 

$

289,750

 

 

$

156,174

 

SPV Asset Facility I

 

$

625,000

 

 

$

575,000

 

 

$

46,679

 

 

$

568,717

 

SPV Asset Facility II

 

$

350,000

 

 

$

230,000

 

 

$

15,307

 

 

$

227,421

 

2027 Notes

 

$

325,000

 

 

$

325,000

 

 

$

-

 

 

$

321,071

 

Promissory Note

 

$

150,000

 

 

$

-

 

 

$

150,000

 

 

$

-

 

Total Debt

 

$

1,900,000

 

 

$

1,290,250

 

 

$

501,736

 

 

$

1,273,383

 

________________

(1)
The amount available reflects any limitations related to each credit facility's borrowing base.
(2)
The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, and 2027 Notes are presented net of deferred financing costs of $4.1 million, $6.3 million, $2.6 million, and $3.9 million, respectively.
(3)
Includes the unrealized translation gain (loss) on borrowings denominated in foreign currencies.

 

 

58

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

 

 

December 31, 2021

 

($ in thousands)

 

Aggregate Principal Committed

 

 

Outstanding Principal

 

 

Amount Available(1)

 

 

Net Carrying Value(2)

 

Revolving Credit Facility(3)

 

$

450,000

 

 

$

215,656

 

 

$

234,344

 

 

$

211,373

 

SPV Asset Facility I

 

$

625,000

 

 

$

575,000

 

 

$

24,665

 

 

$

572,676

 

SPV Asset Facility II

 

$

350,000

 

 

$

135,000

 

 

$

15,139

 

 

$

132,286

 

2027 Notes

 

$

325,000

 

 

$

325,000

 

 

$

-

 

 

$

321,151

 

Promissory Note

 

$

250,000

 

 

$

-

 

 

$

250,000

 

 

$

-

 

Total Debt

 

$

2,000,000

 

 

$

1,250,656

 

 

$

524,148

 

 

$

1,237,486

 

________________

(1)
The amount available reflects any limitation related to each credit facility's borrowing base.
(2)
The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, and 2027 Notes are presented net of deferred financing costs of $4.3 million, $2.3 million, $2.7 million, and $3.8 million, respectively.
(3)
Includes the unrealized translation gain (loss) on borrowings denominated in foreign currencies.

For the three months ended March 31, 2022 and 2021, the components of interest expense were as follows:

 

 

 

For the Three Months Ended March 31,

 

 

($ in thousands)

 

2022

 

 

2021

 

 

Interest expense

 

$

8,600

 

 

$

1,095

 

 

Amortization of debt issuance costs

 

 

740

 

 

 

337

 

 

Total Interest Expense

 

$

9,340

 

 

$

1,432

 

 

Average interest rate

 

 

2.7

 

%

 

2.6

 

%

Average daily borrowings

 

$

1,274,674

 

 

$

169,473

 

 

 

Description of Facilities

Revolving Credit Facility

On September 10, 2021, the Company entered into a senior secured revolving credit agreement (the “Revolving Credit Facility”). The Revolving Credit Facility became effective on September 13, 2021. The parties to the Revolving Credit Facility include the Company, as Borrower, the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”), the issuing banks from time to time parties thereto (each an "Issuing Bank" and collectively, the "Issuing Banks"), JPMorgan Chase Bank, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A., MUFG Union Bank, N.A. and Sumitomo Mitsui Banking Corporation as Joint Lead Arrangers and Joint Book Runners.

The Revolving Credit Facility is guaranteed by OR Lending III LLC, a subsidiary of the Company, and will be guaranteed by certain domestic subsidiaries of the Company that are formed or acquired by the Company in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.

The maximum principal amount of the Revolving Credit Facility is $450 million (increased from $375 million on December 22, 2021), subject to availability under the borrowing base, which is based on the Company’s portfolio investments and other outstanding indebtedness. Maximum capacity under the Revolving Credit Facility may be increased to $1.1 billion through the exercise by the Borrower of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility is secured by a perfected first-priority interest in substantially all of the portfolio investments held by the Company and each Guarantor, subject to certain exceptions, and includes a $50 million limit for swingline loans.

The availability period under the Revolving Credit Facility will terminate on September 9, 2025 (“Revolving Credit Facility Commitment Termination Date”) and the Revolving Credit Facility will mature on September 9, 2026 (“Revolving Credit Facility Maturity Date”). During the period from the Revolving Credit Facility Commitment Termination Date to the Revolving Credit Facility Maturity Date, the Company will be obligated to make mandatory prepayments under the Revolving Credit Facility out of the proceeds of certain asset sales and other recovery events and equity and debt issuances.

The Company may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility, will bear interest at either LIBOR plus a margin, or the prime rate plus a margin. The Company may elect either the

 

59

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

LIBOR or prime rate at the time of drawdown, and loans may be converted from one rate to another at any time at the Company’s option, subject to certain conditions. Further, the Revolving Credit Facility builds in a hardwired approach for the replacement of LIBOR loans in U.S. dollars. For LIBOR loans in other permitted currencies, the Revolving Credit Facility includes customary fallback mechanics for the Company and the Administrative Agent to select an alternative benchmark, subject to the negative consent of required Lenders. The Company will also pay a fee of 0.375% on undrawn amounts under the Revolving Credit Facility.

The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by the Company of additional indebtedness and on the Company’s ability to make distributions to its shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default.

Subscription Credit Facility

On August 12, 2020 (the “Closing Date”), the Company entered into a revolving credit facility (the “Subscription Credit Facility”) with State Street Bank and Trust Company (“State Street”) as administrative agent (the “Administrative Agent”), and State Street and PNC Bank, National Association (“PNC”), as lenders.

The Subscription Credit Facility permitted the Company to borrow up to $550 million, subject to availability under the borrowing base, which was based on unused capital commitments. Effective November 12, 2021, the outstanding balance on the Subscription Credit Facility was paid in full and the facility was terminated pursuant to its terms.

Borrowings under the Subscription Credit Facility bore interest, at the Company's election at the time of drawdown, at a rate per annum equal to (i) in the case of LIBOR rate loans, an adjusted LIBOR rate for the applicable interest period plus 2.00% or (ii) in the case of reference rate loans, the greatest of (A) a prime rate plus 1.00%, (B) the federal funds rate plus 1.50%, and (C) one-month LIBOR plus 1.00%. Loans were able to be converted from one rate to another at any time at the Company's election, subject to certain conditions. The Company predominantly borrowed utilizing LIBOR loans, generally electing one-month LIBOR upon borrowing. The Company also paid an unused commitment fee of 0.25% per annum on the unused commitments.

SPV Asset Facilities

SPV Asset Facility I

On July 29, 2021 (the “SPV Asset Facility I Closing Date”), ORCC III Financing LLC (“ORCC III Financing”), a Delaware limited liability company and newly formed subsidiary of the Company entered into a credit agreement (as amended through the date hereof, the “SPV Asset Facility I”), with ORCC III Financing, as borrower, the Company, as equityholder, the Adviser, as collateral manager, the lenders from time to time parties thereto, Société Générale, as agent, State Street Bank and Trust Company, as collateral agent, collateral administrator and custodian, and Alter Domus (US) LLC as collateral custodian. The parties to the SPV Asset Facility I have entered into various amendments, including to admit new lenders, increase the maximum principal amount available under the facility, add a swingline commitment to the facility, extend the availability period and maturity date, change the interest rate and make various other changes. The following describes the terms of SPV Asset Facility I amended through March 16, 2022 (the “SPV Asset Facility I Third Amendment Date”).

From time to time, the Company expects to sell and contribute certain investments to ORCC III Financing pursuant to a Sale and Contribution Agreement by and between the Company and ORCC III Financing. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility I will be used to finance the origination and acquisition of eligible assets by ORCC III Financing, including the purchase of such assets from the Company. The Company retains a residual interest in assets contributed to or acquired by ORCC III Financing through its ownership of ORCC III Financing. The maximum principal amount of the SPV Asset Facility I is $625 million, which can be drawn in multiple currencies subject to certain conditions; the availability of this amount is subject to the borrowing base, which is determined on the basis of the value and types of ORCC III Financing’s assets from time to time, and satisfaction of certain conditions, including certain concentration limits. The SPV Asset Facility I includes a $100 million sub-limit for swingline loans.

The SPV Asset Facility I provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility I through March 15, 2024, unless the commitments are terminated sooner as provided in the SPV Asset Facility I (the “SPV Asset Facility I Commitment Termination Date”). Unless otherwise terminated, the SPV Asset Facility I will mature on March 16, 2026 (the “SPV Asset Facility I Stated Maturity”). Prior to the SPV Asset Facility I Stated Maturity, proceeds received by ORCC III Financing from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to the Company, subject to certain conditions. On the SPV Asset Facility I Stated Maturity, ORCC III Financing must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to the Company.

 

60

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Amounts drawn in U.S. dollars bear interest at SOFR plus a spread of 2.30%; amounts drawn in Canadian dollars bear interest at CDOR plus a spread of 2.30%; amounts drawn in Euros bear interest at EURIBOR plus a spread of 2.30%; and amounts drawn in British pounds bear interest either at SONIA plus a spread of 2.2693% or at an alternate base rate plus a spread of 2.30%. From the SPV Asset Facility I Closing Date to the SPV Asset Facility I Commitment Termination Date, there is a commitment fee, calculated on a daily basis, ranging from 0.00% to 1.00% on the undrawn amount under the SPV Asset Facility I. The SPV Asset Facility I contains customary covenants, including certain limitations on the activities of ORCC III Financing, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility I is secured by a perfected first priority security interest in the assets of ORCC III Financing and on any payments received by ORCC III Financing in respect of those assets. Assets pledged to the lenders under the SPV Asset Facility I will not be available to pay the debts of the Company.

Borrowings of ORCC III Financing are considered the Company’s borrowings for purposes of complying with the asset coverage requirements under the 1940 Act.

SPV Asset Facility II

On December 2, 2021 (the “SPV Asset Facility II Closing Date”), ORCC III Financing II LLC (“ORCC III Financing II”), a Delaware limited liability company and newly formed subsidiary of the Company entered into a loan financing and servicing agreement (the “SPV Asset Facility II”), with ORCC III Financing II, as borrower, the Company, as equityholder and services provider, the lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as facility agent, State Street Bank and Trust Company, as collateral agent and Alter Domus (US) LLC, as collateral custodian. The parties to the SPV Asset Facility II have entered an amendment which converted the benchmark rate of the facility from LIBOR to term SOFR and added an additional lender and reallocated lender commitments. The following describes the terms of SPV Asset Facility II amended through February 18, 2022 (the “SPV Asset Facility II First Amendment Date”).

From time to time, the Company expects to sell and contribute certain loan assets to ORCC III Financing II pursuant to a Sale and Contribution Agreement by and between the Company and ORCC III Financing II. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility II will be used to finance the origination and acquisition of eligible assets by ORCC III Financing II, including the purchase of such assets from the Company. The Company retains a residual interest in assets contributed to or acquired by ORCC III Financing II through our ownership of ORCC III Financing II. The maximum principal amount of the SPV Asset Facility II is $350 million; the availability of this amount is subject to a borrowing base test, which is based on the value of ORCC III Financing II’s assets from time to time, and satisfaction of certain conditions, including interest spread and weighted average coupon tests, certain concentration limits and collateral quality tests.

The SPV Asset Facility II provides for the ability to borrow, reborrow, repay and prepay advances under the SPV Asset Facility II for a period of up to three years after the SPV Asset Facility II Closing Date unless such period is extended or accelerated under the terms of the SPV Asset Facility II (the “SPV Asset Facility II Revolving Period”). Unless otherwise extended, accelerated or terminated under the terms of the SPV Asset Facility II, the SPV Asset Facility II will mature on the date that is two years after the last day of the SPV Asset Facility II Revolving Period (the “SPV Asset Facility II Termination Date”). Prior to the SPV Asset Facility II Termination Date, proceeds received by ORCC III Financing II from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding advances, and the excess may be returned to the Company, subject to certain conditions. On the SPV Asset Facility II Termination Date, ORCC III Financing II must pay in full all outstanding fees and expenses and all principal and interest on outstanding advances, and the excess may be returned to the Company.

Amounts drawn bear interest at SOFR (or, in the case of certain lenders that are commercial paper conduits, the lower of (a) their cost of funds and (b) SOFR, such SOFR not to be lower than zero) plus a spread equal to 1.95% per annum, which spread will increase (a) on and after the end of the SPV Asset Facility II Revolving Period by 0.15% per annum if no event of default has occurred and (b) by 2.00% per annum upon the occurrence of an event of default (such spread, the “Applicable Margin”). SOFR may be replaced as a base rate under certain circumstances. During the SPV Asset Facility II Revolving Period, ORCC III Financing II will pay an undrawn fee ranging from 0.00% to 0.25% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility II. During the SPV Asset Facility II Revolving Period, if the undrawn commitments are in excess of a certain portion (initially 12.5% and increasing in stages to 25%, 50% and 70%) of the total commitments under the SPV Asset Facility II, ORCC III Financing II will also pay a make-whole fee equal to the Applicable Margin multiplied by such excess undrawn commitment amount, reduced by the undrawn fee payable on such excess. ORCC III Financing II will also pay Deutsche Bank AG, New York Branch, certain fees (and reimburse certain expenses) in connection with its role as facility agent. The SPV Asset Facility II contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC III Financing II, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility II is secured by a perfected first priority security interest in the assets of ORCC III Financing II and on any payments received by ORCC III Financing II in respect of those assets. Assets pledged to the lenders will not be available to pay the debts of the Company.

 

61

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Borrowings of ORCC III Financing II are considered the Company’s borrowings for purposes of complying with the asset coverage requirements under the 1940 Act.

Unsecured Notes

2027 Notes

On October 13, 2021, the Company issued $325 million aggregate principal amount of notes that mature on April 13, 2027 (the “2027 Notes”) in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and for initial resale to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act. The 2027 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The 2027 Notes initially bear interest at a rate of 3.125% per year, payable semi-annually on April 13 and October 13 of each year, commencing on April 13, 2022. Concurrent with the issuance of the 2027 Notes, we entered into a Registration Rights Agreement for the benefit of the purchasers of the 2027 Notes. Pursuant to the Registration Rights Agreement, we are obligated to file a registration statement with the SEC with respect to an offer to exchange the 2027 Notes for a new issue of debt securities registered under the Securities Act with terms substantially identical to those of the 2027 Notes (except for provisions relating to transfer restrictions and payment of additional interest) and to use our commercially reasonable efforts to consummate such exchange offer on the earliest practicable date after the registration statement has been declared effective but in no event later than 365 days after the initial issuance of the 2027 Notes. If we fail to satisfy our registration obligations under the Registration Rights Agreement, we will be required to pay additional interest to the holders of the 2027 Notes. The Company may redeem some or all of the 2027 Notes at any time, or from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of the 2027 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2027 Notes to be redeemed through March 13, 2027 (the date falling one month prior to the maturity date of the 2027 Notes), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2027 Notes on or after March 13, 2027 (the date falling one month prior to the maturity date of the 2027 Notes), the redemption price for the 2027 Notes will be equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Promissory Note

On September 13, 2021, the Company as borrower, entered into a Loan Agreement (the “FIC Agreement”) with Owl Rock Feeder FIC BDC III LLC (“Feeder FIC”), an affiliate of the Adviser, as lender, to enter into revolving promissory notes (the “Promissory Notes”) to borrow up to an aggregate of $250 million from Feeder FIC. On February 23, 2022, the Company entered into an amendment to the FIC Agreement to reduce the amount that can be borrowed pursuant to the Promissory Notes from $250 million to $150 million. The Company may re-borrow any amount repaid; however, there is no funding commitment between Feeder FIC and the Company.

The interest rate on amounts borrowed pursuant to the Promissory Notes, prior to February 23, 2022, was based on the lesser of the rate of interest for an ABR Loan or a Eurodollar Loan under the credit agreement dated as of April 15, 2021, as amended or supplemented from time to time, by and among the Adviser, as borrower, the several lenders from time to time party thereto, MUFG Union Bank, N.A., as Collateral Agent and MUFG Bank, Ltd., as Administrative Agent. The interest rate on amounts borrowed pursuant to the Promissory Notes after February 23, 2022 is based on the lesser of the rate of interest for a SOFR Loan or an ABR Loan under the Credit Agreement dated as of December 7, 2021, as amended or supplemented from time to time, by and among Blue Owl Finance LLC, as Borrower, Blue Owl Capital Holdings LP and Blue Owl Capital Carry LP as Parent Guarantors, the Subsidiary Guarantors party thereto, Bank of America, N.A., as Syndication Agent, JPMorgan Chase Bank, N.A., Wells Fargo Bank, National Association and Sumitomo Mitsui Banking Corporation, as Co-Documentation Agents and MUFG Bank, Ltd., as Administrative Agent.

The unpaid principal balance of any Promissory Note and accrued interest thereon is payable by the Company from time to time at the discretion of the Company but immediately due and payable upon 120 days written notice by Feeder FIC, and in any event due and payable in full no later than February 28, 2023. The Company intends to use the borrowed funds to make investments in portfolio companies consistent with its investment strategies.

 

 

62

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Note 7. Commitments and Contingencies

Portfolio Company Commitments

From time to time, the Company may enter into commitments to fund investments. As of March 31, 2022 and December 31, 2021, the Company had the following outstanding commitments to fund investments in current portfolio companies:

Portfolio Company

 

Investment

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

ABB/Con-cise Optical Group LLC

 

First lien senior secured revolving loan

 

$

59

 

 

$

-

 

 

Alera Group, Inc.

 

First lien senior secured delayed draw term loan

 

 

677

 

 

 

677

 

 

Apex Group Treasury LLC

 

Second lien senior secured delayed draw term loan

 

 

6,617

 

 

 

6,617

 

 

Ardonagh Midco 3 PLC

 

First lien senior secured delayed draw term loan

 

 

231

 

 

 

237

 

 

Ascend Buyer, LLC (dba PPC Flexible Packaging)

 

First lien senior secured revolving loan

 

 

4,255

 

 

 

4,255

 

 

Associations, Inc.

 

First lien senior secured revolving loan

 

 

5,315

 

 

 

5,315

 

 

AxiomSL Group, Inc.

 

First lien senior secured delayed draw term loan

 

 

1,834

 

 

 

1,834

 

 

AxiomSL Group, Inc.

 

First lien senior secured revolving loan

 

 

4,003

 

 

 

4,003

 

 

Bayshore Intermediate #2, L.P. (dba Boomi)

 

First lien senior secured revolving loan

 

 

1,593

 

 

 

1,593

 

 

BCPE Osprey Buyer, Inc. (dba PartsSource)

 

First lien senior secured delayed draw term loan

 

 

13,340

 

 

 

13,340

 

 

BCPE Osprey Buyer, Inc. (dba PartsSource)

 

First lien senior secured revolving loan

 

 

5,645

 

 

 

5,645

 

 

BCTO BSI Buyer, Inc. (dba Buildertrend)

 

First lien senior secured revolving loan

 

 

444

 

 

 

444

 

 

BP Veraison Buyer, LLC (dba Sun World)

 

First lien senior secured delayed draw term loan

 

 

14,865

 

 

 

14,865

 

 

BP Veraison Buyer, LLC (dba Sun World)

 

First lien senior secured revolving loan

 

 

4,459

 

 

 

4,459

 

 

Brightway Holdings, LLC

 

First lien senior secured revolving loan

 

 

2,105

 

 

 

2,105

 

 

CFS Brands, LLC

 

First lien senior secured delayed draw term loan

 

 

567

 

 

 

-

 

 

CivicPlus, LLC

 

First lien senior secured delayed draw term loan

 

 

4,400

 

 

 

4,400

 

 

CivicPlus, LLC

 

First lien senior secured revolving loan

 

 

880

 

 

 

880

 

 

CSC MKG Topco LLC. (dba Medical Knowledge Group)

 

First lien senior secured revolving loan

 

 

112

 

 

 

-

 

 

Denali Buyerco LLC (dba Summit Companies)

 

First lien senior secured delayed draw term loan

 

 

16,843

 

 

 

18,980

 

 

Denali Buyerco LLC (dba Summit Companies)

 

First lien senior secured revolving loan

 

 

4,459

 

 

 

6,852

 

 

Diamondback Acquisition, Inc. (dba Sphera)

 

First lien senior secured delayed draw term loan

 

 

9,553

 

 

 

9,553

 

 

Dodge Data & Analytics LLC

 

First lien senior secured revolving loan

 

 

-

 

 

 

374

 

 

 

 

 

63

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Portfolio Company

 

Investment

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

EET Buyer, Inc. (dba e-Emphasys)

 

First lien senior secured revolving loan

 

 

1,955

 

 

 

1,955

 

 

Evolution BuyerCo, Inc. (dba SIAA)

 

First lien senior secured revolving loan

 

 

2,230

 

 

 

2,230

 

 

Forescout Technologies, Inc.

 

First lien senior secured revolving loan

 

 

2,288

 

 

 

2,288

 

 

Fortis Solutions Group, LLC

 

First lien senior secured delayed draw term loan

 

 

9,183

 

 

 

9,183

 

 

Fortis Solutions Group, LLC

 

First lien senior secured revolving loan

 

 

3,148

 

 

 

3,148

 

 

Gainsight, Inc.

 

First lien senior secured revolving loan

 

 

872

 

 

 

872

 

 

Gaylord Chemical Company, L.L.C.

 

First lien senior secured revolving loan

 

 

3,973

 

 

 

3,973

 

 

GI Ranger Intermediate, LLC (dba Rectangle Health)

 

First lien senior secured delayed draw term loan

 

 

-

 

 

 

2,789

 

 

GI Ranger Intermediate, LLC (dba Rectangle Health)

 

First lien senior secured revolving loan

 

 

1,506

 

 

 

1,673

 

 

Global Music Rights, LLC

 

First lien senior secured revolving loan

 

 

7,500

 

 

 

7,500

 

 

GovBrands Intermediate, Inc.

 

First lien senior secured delayed draw term loan

 

 

870

 

 

 

870

 

 

GovBrands Intermediate, Inc.

 

First lien senior secured revolving loan

 

 

881

 

 

 

881

 

 

Granicus, Inc.

 

First lien senior secured delayed draw term loan

 

 

1,006

 

 

 

1,006

 

 

Granicus, Inc.

 

First lien senior secured revolving loan

 

 

1,187

 

 

 

1,187

 

 

GS Acquisitionco, Inc. (dba insightsoftware)

 

First lien senior secured delayed draw term loan

 

 

5,081

 

 

 

5,081

 

 

Guidehouse Inc.

 

First lien senior secured revolving loan

 

 

-

 

 

 

3,356

 

 

Hercules Borrower LLC (dba The Vincit Group)

 

First lien senior secured delayed draw term loan

 

 

2,183

 

 

 

3,693

 

 

Hercules Borrower LLC (dba The Vincit Group)

 

First lien senior secured revolving loan

 

 

3,839

 

 

 

4,298

 

 

IG Investments Holdings, LLC (dba Insight Global)

 

First lien senior secured revolving loan

 

 

4,335

 

 

 

2,710

 

 

Individual Foodservice Holdings, LLC

 

First lien senior secured delayed draw term loan

 

 

-

 

 

 

15,723

 

 

Individual Foodservice Holdings, LLC

 

First lien senior secured revolving loan

 

 

2,055

 

 

 

2,387

 

 

Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)

 

First lien senior secured delayed draw term loan

 

 

7,400

 

 

 

-

 

 

Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)

 

First lien senior secured delayed draw term loan

 

 

7,400

 

 

 

-

 

 

Inovalon Holdings, Inc.

 

First lien senior secured delayed draw term loan

 

 

5,399

 

 

 

5,399

 

 

Intelerad Medical Systems Incorporated

 

First lien senior secured revolving loan

 

 

594

 

 

 

594

 

 

Interoperability Bidco, Inc. (dba Lyniate)

 

First lien senior secured revolving loan

 

 

217

 

 

 

-

 

 

KBP Brands, LLC

 

First lien senior secured delayed draw term loan

 

 

74

 

 

 

-

 

 

KPSKY Acquisition, Inc. (dba BluSky)

 

First lien senior secured delayed draw term loan

 

 

2,051

 

 

 

2,051

 

 

Lignetics Investment Corp.

 

First lien senior secured delayed draw term loan

 

 

6,373

 

 

 

6,373

 

 

Lignetics Investment Corp.

 

First lien senior secured revolving loan

 

 

5,480

 

 

 

6,373

 

 

Medline Borrower, LP

 

First lien senior secured revolving loan

 

 

1,847

 

 

 

1,847

 

 

MHE Intermediate Holdings, LLC (dba OnPoint Group)

 

First lien senior secured delayed draw term loan

 

 

2,264

 

 

 

2,264

 

 

 

 

 

64

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Portfolio Company

 

Investment

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

MHE Intermediate Holdings, LLC (dba OnPoint Group)

 

First lien senior secured revolving loan

 

 

3,430

 

 

 

3,571

 

 

Milan Laser Holdings LLC

 

First lien senior secured revolving loan

 

 

3,529

 

 

 

3,529

 

 

Ministry Brands Holdings, LLC.

 

First lien senior secured delayed draw term loan

 

 

3,362

 

 

 

3,362

 

 

Ministry Brands Holdings, LLC.

 

First lien senior secured revolving loan

 

 

1,008

 

 

 

1,008

 

 

National Dentex Labs LLC (fka Barracuda Dental LLC)

 

First lien senior secured delayed draw term loan

 

 

663

 

 

 

663

 

 

National Dentex Labs LLC (fka Barracuda Dental LLC)

 

First lien senior secured revolving loan

 

 

430

 

 

 

1,054

 

 

Natural Partners, LLC

 

First lien senior secured revolving loan

 

 

170

 

 

 

-

 

 

NMI Acquisitionco, Inc. (dba Network Merchants)

 

First lien senior secured delayed draw term loan

 

 

1,375

 

 

 

1,375

 

 

NMI Acquisitionco, Inc. (dba Network Merchants)

 

First lien senior secured revolving loan

 

 

558

 

 

 

558

 

 

Notorious Topco, LLC (dba Beauty Industry Group)

 

First lien senior secured delayed draw term loan

 

 

8,803

 

 

 

8,803

 

 

Notorious Topco, LLC (dba Beauty Industry Group)

 

First lien senior secured revolving loan

 

 

3,873

 

 

 

4,401

 

 

OB Hospitalist Group, Inc.

 

First lien senior secured revolving loan

 

 

6,851

 

 

 

6,120

 

 

Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.)

 

First lien senior secured revolving loan

 

 

2,654

 

 

 

2,654

 

 

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)

 

First lien senior secured delayed draw term loan

 

 

-

 

 

 

2,190

 

 

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)

 

First lien senior secured revolving loan

 

 

1,552

 

 

 

1,552

 

 

Pluralsight, LLC

 

First lien senior secured revolving loan

 

 

1,294

 

 

 

1,294

 

 

QAD Inc.

 

First lien senior secured revolving loan

 

 

6,000

 

 

 

6,000

 

 

Quva Pharma, Inc.

 

First lien senior secured revolving loan

 

 

851

 

 

 

1,182

 

 

Refresh Parent Holdings, Inc.

 

First lien senior secured delayed draw term loan

 

 

-

 

 

 

133

 

 

Refresh Parent Holdings, Inc.

 

First lien senior secured revolving loan

 

 

-

 

 

 

1,149

 

 

Relativity ODA LLC

 

First lien senior secured revolving loan

 

 

1,480

 

 

 

1,480

 

 

Smarsh Inc.

 

First lien senior secured delayed draw term loan

 

 

190

 

 

 

-

 

 

Smarsh Inc.

 

First lien senior secured revolving loan

 

 

48

 

 

 

-

 

 

Sonny's Enterprises LLC

 

First lien senior secured revolving loan

 

 

3,945

 

 

 

3,381

 

 

SWK BUYER, Inc. (dba Stonewall Kitchen)

 

First lien senior secured delayed draw term loan

 

 

175

 

 

 

-

 

 

SWK BUYER, Inc. (dba Stonewall Kitchen)

 

First lien senior secured revolving loan

 

 

63

 

 

 

-

 

 

Tahoe Finco, LLC

 

First lien senior secured revolving loan

 

 

6,279

 

 

 

6,279

 

 

Tamarack Intermediate, L.L.C. (dba Verisk 3E)

 

First lien senior secured revolving loan

 

 

112

 

 

 

-

 

 

TEMPO BUYER CORP. (dba Global Claims Services)

 

First lien senior secured delayed draw term loan

 

 

10,317

 

 

 

10,317

 

 

TEMPO BUYER CORP. (dba Global Claims Services)

 

First lien senior secured revolving loan

 

 

4,952

 

 

 

5,159

 

 

The Shade Store, LLC

 

First lien senior secured revolving loan

 

 

2,955

 

 

 

5,909

 

 

Thunder Purchaser, Inc. (dba Vector Solutions)

 

First lien senior secured delayed draw term loan

 

 

6,124

 

 

 

6,124

 

 

 

 

65

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Portfolio Company

 

Investment

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

Thunder Purchaser, Inc. (dba Vector Solutions)

 

First lien senior secured revolving loan

 

 

1,776

 

 

 

2,143

 

 

Troon Golf, L.L.C.

 

First lien senior secured revolving loan

 

 

4,392

 

 

 

5,405

 

 

Ultimate Baked Goods Midco, LLC

 

First lien senior secured revolving loan

 

 

750

 

 

 

950

 

 

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)

 

First lien senior secured revolving loan

 

 

1,078

 

 

 

1,078

 

 

Velocity HoldCo III Inc. (dba VelocityEHS)

 

First lien senior secured revolving loan

 

 

368

 

 

 

368

 

 

When I Work, Inc.

 

First lien senior secured revolving loan

 

 

4,164

 

 

 

4,164

 

 

Total Unfunded Portfolio Company Commitments

 

 

 

$

291,018

 

 

$

311,487

 

 

 

 

66

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

 

As of March 31, 2022, the Company believed it had adequate financial resources to satisfy the unfunded portfolio company commitments.

Investor Commitments

As of March 31, 2022, the Company had approximately $1.7 billion in total Capital Commitments from investors (approximately $50.1 million undrawn), of which $62.4 million is from entities affiliated with or related to the Adviser. These undrawn Capital Commitments will no longer remain in effect following the completion of a Liquidity Event.

As of December 31, 2021, the Company had approximately $1.7 billion in total Capital Commitment from investors (approximately $48.6 million undrawn), of which $62.4 million is from entities affiliated with or related to the Adviser. These undrawn Capital Commitments will no longer remain in effect following the completion of a Liquidity Event.

Other Commitments and Contingencies

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. At March 31, 2022, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

 

Note 8. Net Assets

Subscriptions and Drawdowns

In connection with its formation, the Company has the authority to issue 500,000,000 common shares at $0.01 per share par value.

On June 4, 2020, the Company issued 100 common shares for $1,500 to Owl Rock Diversified Advisors LLC.

The Company has entered into Subscription Agreements with investors providing for the private placement of the Company’s common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Company’s common shares up to the amount of their respective Capital Commitment on an as-needed basis each time the Company delivers a capital call notice to its investors.

During the three months ended March 31, 2022 and 2021, the Company did not deliver capital call notices to investors.

 

Distributions

 

The following table reflects the distributions declared on shares of the Company’s common stock during the three months ended March 31, 2022:

 

 

 

March 31, 2022

 

Date Declared

 

Record Date

 

Payment Date

 

Distribution per Share

 

February 23, 2022

 

March 31, 2022

 

May 13, 2022

 

$

0.33

 

 

The following table reflects the distributions declared on shares of the Company's common stock during the three months ended March 31, 2021:

 

 

 

March 31, 2021

 

Date Declared

 

Record Date

 

Payment Date

 

Distribution per Share

 

February 23, 2021

 

March 31, 2021

 

May 14, 2021

 

$

0.33

 

 

Dividend Reinvestment

With respect to distributions, the Company has adopted an “opt out” dividend reinvestment plan for common shareholders. As a result, in the event of a declared distribution, each shareholder that has not “opted out” of the dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of the Company’s common stock rather than receiving cash distributions. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

 

67

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the three months ended March 31, 2022:

 

Date Declared

 

Record Date

 

Payment Date

 

Shares

 

November 2, 2021

 

December 31, 2021

 

January 31, 2022

 

 

382,099

 

 

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the three months ended March 31, 2021:

 

Date Declared

 

Record Date

 

Payment Date

 

Shares

 

December 31, 2020

 

December 31, 2020

 

January 29, 2021

 

 

30,532

 

 

Note 9. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2022 and 2021:

 

 

 

Three Months Ended March 31,

 

 

($ in thousands, except per share amounts)

 

2022

 

 

2021

 

 

Increase (decrease) in net assets resulting from operations

 

$

26,307

 

 

$

8,818

 

 

Weighted average shares of common stock
   outstanding—basic and diluted

 

 

111,084,841

 

 

 

19,879,496

 

 

Earnings per common share—basic and diluted

 

$

0.24

 

 

$

0.44

 

 

 

Note 10. Income Tax

The Company has elected to be treated as a RIC under Subchapter M of the Code, and the Company intends to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, the Company must, among other things, distribute to its shareholders in each taxable year generally at least 90% of the Company’s investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain tax treatment as a RIC, the Company, among other things, intends to make the requisite distributions to its shareholders, which generally relieves the Company from corporate-level U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, the Company can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, the Company will accrue excise tax on estimated excess taxable income.

For the three months ended March 31, 2022, the Company accrued U.S. federal excise tax of $413.3 thousand. For the three months ended March 31, 2021, the Company accrued U.S. federal excise tax of $33.0 thousand.

 

 

68

Owl Rock Capital Corporation III

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Note 11. Financial Highlights

The following are the financial highlights for a common share outstanding during the three months ended March 31, 2022 and 2021:

 

 

 

For the Three Months Ended March 31,

($ in thousands, except share and per share amounts)

 

2022

 

 

2021

 

 

Per share data:

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

15.05

 

 

$

14.42

 

 

Net investment income (loss)(1)

 

 

0.37

 

 

 

0.35

 

 

Net realized and unrealized gain (loss)(1)

 

 

(0.13

)

 

 

0.09

 

 

Total from operations

 

 

0.24

 

 

 

0.44

 

 

Distributions declared from net investment income(2)

 

 

(0.33

)

 

 

(0.33

)

 

Total increase in net assets

 

 

(0.09

)

 

 

0.11

 

 

Net asset value, end of period

 

$

14.96

 

 

$

14.53

 

 

Shares outstanding, end of period

 

 

111,212,207

 

 

 

19,888,995

 

 

Total Return, based on net asset value(3)

 

 

1.6

 

%

 

3.1

 

%

Ratios / Supplemental Data

 

 

 

 

 

 

 

Asset coverage ratio(4)

 

 

228.2

 

%

 

191.2

 

%

Ratio of total expenses to average net assets(5)

 

 

3.7

 

%

 

4.4

 

%

Ratio of net investment income to average net assets(5)

 

 

10.0

 

%

 

9.9

 

%

Net assets, end of period

 

$

1,663,566

 

 

$

289,065

 

 

Weighted-average shares outstanding

 

 

111,084,841

 

 

 

19,879,496

 

 

Total capital commitments, end of period

 

 

1,696,537

 

 

 

1,461,852

 

 

Ratio of total contributed capital to total committed capital, end of period

 

 

97.0

 

%

 

19.5

 

%

Portfolio turnover rate

 

 

2.0

 

%

 

8.2

 

%

________________

(1)
The per share data was derived using the weighted average shares outstanding during the period.
(2)
The per share data was derived using the actual shares outstanding at the date of the relevant transaction.
(3)
Total return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions per share, if any, divided by the beginning NAV per share.
(4)
In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 150% after such borrowing.
(5)
The ratio reflects an annualized amount, except in the case of non-recurring expenses (e.g. initial organization expenses).

 

Note 12. Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date of issuance. There are no subsequent events to disclose except for the following:

On May 3, 2022, the Board declared a distribution of 90% of estimated second quarter taxable income and net capital gains, if any, for shareholders of record on June 30, 2022, payable on or before August 15, 2022.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with “ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS”. This discussion contains forward-looking statements, which relate to future events or the future performance or financial condition of Owl Rock Capital Corporation III and involves numerous risks and uncertainties, including, but not limited to, those described in our Form 10-K for the fiscal year ended December 31, 2021 and in “ITEM 1A. RISK FACTORS.” This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward Looking Statements” set forth on page 1 of this Quarterly Report on Form 10-Q. Actual results could differ materially from those implied or expressed in any forward-looking statements.

Overview

Owl Rock Capital Corporation III (the “Company”, “we”, “us” or “our”) is a Maryland corporation formed on January 27, 2020. We were formed primarily to originate and make loans to, and make debt and equity investments in middle-market companies based primarily in the United States. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. Our investment objective is to generate current income and, to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.

We are managed by Owl Rock Diversified Advisors LLC (“the Adviser” or “our Adviser”). The Adviser is registered with the U.S. Securities and Exchange Commission (the “SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), an indirect subsidiary of Blue Owl Capital Inc. (“Blue Owl”) (NYSE: OWL) and part of Owl Rock, a division of Blue Owl focused on direct lending. Subject to the overall supervision of our board of directors (“the Board” or “our Board”), the Adviser manages our day-to-day operations, and provides investment advisory and management services to us. The Adviser or its affiliates may engage in certain origination activities and receive attendant arrangement, structuring or similar fees from portfolio companies. The Adviser is responsible for managing our business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring our investments, and monitoring our portfolio companies on an ongoing basis through a team of investment professionals.

We conduct private offerings (each, a “Private Offering”) of our common shares to accredited investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended. At the closing of each Private Offering, each investor makes a capital commitment (a “Capital Commitment”) to purchase shares of our common stock pursuant to a subscription agreement entered into with us. Until the earlier of a Liquidity Event (as defined below) and the end of the Commitment Period (as defined below), investors are required to fund drawdowns to purchase shares of our common stock up to the amount of their respective Capital Commitment on an as-needed basis each time we deliver a drawdown notice to our investors. The initial closing of the Private Offering occurred on June 5, 2020 (the “Initial Closing”). As of May 6, 2022, we had $1.7 billion in total Capital Commitments from investors, of which $62.4 million is from entities affiliated with or related to our Adviser. From time to time during the Commitment Period (as defined below), the Adviser may, in its sole discretion, permit one or more additional closings (“Subsequent Closings”) as additional Capital Commitments are obtained (the conclusion of all Subsequent Closings, if any, the “Final Closing”). The “Commitment Period” will continue until the seven year anniversary of the Initial Closing. If we have not consummated a Liquidity Event by the end of the Commitment Period, subject to extension for two additional one-year periods, in the sole discretion of the Board, the Board (subject to any necessary shareholder approvals and applicable requirements of the Investment Company Act of 1940 (the “1940 Act”)) will use its commercially reasonable efforts to wind down and/or liquidate and dissolve the Company in an orderly manner. A Liquidity Event could include: (i) future quotation or listing of our securities on a national securities exchange (“Exchange Listing"); (ii) a transaction, including a merger, in which shareholders receive cash or shares of an entity, including an entity that is affiliated with us, and such shares are listed on a national securities exchange; or (iii) the sale of all or substantially all of our assets.

Placement activities are conducted by our officers and the Adviser. In addition, we may enter into agreements with placement agents or broker-dealers to solicit Capital Commitments. For example, the Company and the Adviser entered into a dealer manager agreement with Blue Owl Securities LLC (“Blue Owl Securities”) pursuant to which Blue Owl Securities and certain participating broker-dealers will solicit Capital Commitments and the Company entered into a placement agent agreement with Blue Owl Securities pursuant to which employees of Blue Owl Securities may conduct placement activities. Blue Owl Securities, an affiliate of Blue Owl, is registered as a broker-dealer with the SEC and is a member of the Financial Industry Regulatory Authority. In addition, the Company, the Adviser and third party placement agents may enter into placement agreements from time to time, pursuant to which such placement agents will solicit Capital Commitments. Fees paid pursuant to these agreements will be paid by our Adviser.

Blue Owl consists of three divisions: (1) Owl Rock, which focuses on direct lending, (2) Dyal, which focuses on providing capital to institutional alternative asset managers and (3) Oak Street, which focuses on real estate strategies. Owl Rock is comprised of the Adviser, Owl Rock Capital Advisors LLC (“ORCA”), Owl Rock Technology Advisors LLC ("ORTA"), Owl Rock Technology Advisors II LLC ("ORTA II") and Owl Rock Capital Private Fund Advisors LLC ("ORPFA" and together with the Adviser, ORCA, ORTA, and ORTA II the “Owl Rock Advisers”), which are also investment advisers. As of March 31, 2022, the Adviser and its

 

70

 

affiliates had $44.8 billion of assets under management across the Owl Rock division of Blue Owl. As of April 1, 2022, the Owl Rock division of Blue Owl also includes a CLO business ("Wellfleet"), which was acquired from affiliates of Littlejohn & Co. LLC.

The management of our investment portfolio is the responsibility of the Adviser and the Investment Committee. We consider these individuals to be our portfolio managers. The Investment Team is led by Douglas I. Ostrover, Marc S. Lipschultz and Craig W. Packer and is supported by certain members of the Adviser's senior executive team and the Investment Committee. The Investment Team, including members of Wellfleet, under the Investment Committee's supervision, sources investment opportunities, conducts research, performs due diligence on potential investments, structures our investments and will monitor our portfolio companies on an ongoing basis. The Investment Committee is comprised of Douglas I. Ostrover, Marc S. Lipschultz, Craig W. Packer, Alexis Maged and Jeff Walwyn. The Investment Committee meets regularly to consider our investments, direct our strategic initiatives and supervise the actions taken by the Adviser on our behalf. In addition, the Investment Committee reviews and determines whether to make prospective investments (including approving parameters or guidelines pursuant to which investments in broadly syndicated loans may be bought and sold), structures financings and monitors the performance of the investment portfolio. Each investment opportunity requires the approval of a majority of the Investment Committee. Follow-on investments in existing portfolio companies may require the Investment Committee's approval beyond that obtained when the initial investment in the portfolio company was made. In addition, temporary investments, such as those in cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less, may require approval by the Investment Committee. The compensation packages of certain Investment Committee members from the Adviser include various combinations of discretionary bonuses and variable incentive compensation based primarily on performance for services provided and may include shares of Blue Owl.

We may be prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, the prior approval of the SEC. We rely on exemptive relief, that has been granted by the SEC to ORCA and certain of its affiliates, to permit us to co-invest with other funds managed by the Adviser or certain of its affiliates, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. Pursuant to such exemptive relief, we generally are permitted to co-invest with certain of our affiliates if a “required majority” (as defined in Section 57(o) of the “1940 Act”) of our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our shareholders and do not involve overreaching by us or our shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of our shareholders and is consistent with our investment objective and strategies, (3) the investment by our affiliates would not disadvantage us, and our participation would not be on a basis different from or less advantageous than that on which our affiliates are investing, and (4) the proposed investment by us would not benefit our Adviser or its affiliates or any affiliated person of any of them (other than the parties to the transaction), except to the extent permitted by the exemptive relief and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act.

On April 24, 2020, we formed a wholly-owned subsidiary, OR Lending III LLC, a Delaware limited liability company, which holds a California finance lenders license. OR Lending III LLC makes loans to borrowers headquartered in California. From time to time we may form wholly-owned subsidiaries to facilitate our normal course of business.

We have elected to be regulated as a BDC under the 1940 Act and as a regulated investment company (“RIC”) for tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). As a result, we are required to comply with various statutory and regulatory requirements, such as:

•
the requirement to invest at least 70% of our assets in “qualifying assets”, as such term is defined in the 1940 Act;
•
source of income limitations;
•
asset diversification requirements; and
•
the requirement to distribute (or be treated as distributing) in each taxable year at least 90% of our investment company taxable income and tax-exempt interest for that taxable year.

COVID-19 Developments

In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization. In response to the outbreak, our Adviser instituted a work from home policy and began monitoring the ability of its employees to safely return to the office. In October 2021, the Adviser implemented a return to in-office work policy across all of its offices. This policy encourages a return to in-office work but allows for flexibility to work from home based on current conditions.

We have and continue to assess the impact of COVID-19 on our portfolio companies. We cannot predict the full impact of the COVID-19 pandemic, including its duration in the United States and worldwide, the effectiveness of governmental responses designed to mitigate strain to businesses and the economy and the magnitude of the economic impact of the outbreak. The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and may in the future cause, business shutdowns and cancellations of events and travel. In addition, while economic activity remains healthy and well improved from the beginning of the COVID-19 pandemic, we continue to observe supply chain interruptions, labor difficulties, commodity inflation and elements of geo-political, economic and financial market instability both globally and in the United States.

 

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We have built out our portfolio management team to include workout experts and continue to closely monitor our portfolio companies; however, we are unable to predict the duration of any business and supply-chain disruptions or labor difficulties, whether COVID-19 will negatively affect our portfolio companies’ operating results or the impact that such disruptions may have on our results of operations and financial condition.

Our Investment Framework

We are a Maryland corporation organized primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. Since our Adviser and its affiliates began investment activities in April 2016 through March 31, 2022, our Adviser and its affiliates have originated $56.0 billion aggregate principal amount of investments, of which $53.0 billion of aggregate principal amount of investments prior to any subsequent exits or repayments, was retained by either us or a corporation or fund advised by our Adviser or its affiliates. We seek to generate current income primarily in U.S. middle market companies through direct originations of senior secured loans or originations of unsecured loans, subordinated loans or mezzanine loans, broadly syndicated loans and, to a lesser extent, investments in equity and equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. Our equity investments are typically not control-oriented investments and we may structure such equity investments to include provisions protecting our rights as a minority-interest holder.

We define “middle market companies” generally to mean companies with earnings before interest expense, income tax expense, depreciation and amortization, or “EBITDA,” between $10 million and $250 million annually and/or annual revenue of $50 million to $2.5 billion at the time of investment, although we may on occasion invest in smaller or larger companies if an opportunity presents itself. We generally seek to invest in companies with a loan-to-value ratio of 50% or below. Our target credit investments will typically have maturities between three and ten years and generally range in size between $20 million and $250 million. The investment size will vary with the size of our capital base.

We expect that generally our portfolio composition will be majority debt or income producing securities, which may include “covenant-lite” loans (as defined below), with a lesser allocation to equity or equity-linked opportunities, which we may hold directly or through special purpose vehicles. In addition, we may invest a portion of our portfolio in opportunistic investments and broadly syndicated loans, which will not be our primary focus, but will be intended to enhance returns to our shareholders and from time to time, we may evaluate and enter into strategic portfolio transactions which may result in portfolio companies which we are considered to control. These investments may include high-yield bonds and broadly-syndicated loans, including publicly traded debt instruments, which are typically originated and structured by banks on behalf of large corporate borrowers with employee counts, revenues, EBITDAs and enterprise values larger than the middle-market characteristics described above. Our portfolio composition may fluctuate from time to time based on market conditions and interest rates.

Covenants are contractual restrictions that lenders place on companies to limit the corporate actions a company may pursue. Generally, the loans in which we expect to invest will have financial maintenance covenants, which are used to proactively address materially adverse changes in a portfolio company’s financial performance. However, to a lesser extent, we may invest in “covenant-lite” loans. We use the term “covenant-lite” to refer generally to loans that do not have a complete set of financial maintenance covenants. Generally, “covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance covenants.

We target portfolio companies where we can structure larger transactions. As of March 31, 2022, our average debt investment size in each of our portfolio companies was approximately $28.2 million based on fair value. As of March 31, 2022, our portfolio companies, excluding investments that fall outside of our typical borrower profile, represented 84.0% of our total debt portfolio based on fair value and these portfolio companies had weighted average annual revenue of $693 million, weighted average annual EBITDA of $158 million and an average interest coverage of 3.1x.

The companies in which we invest use our capital primarily to support their growth, acquisitions, market or product expansion, refinancings and/or recapitalizations. The debt in which we invest typically is not rated by any rating agency, but if these instruments were rated, they would likely receive a rating of below investment grade (that is, below BBB- or Baa3), which is often referred to as “high yield” or “junk”.

A majority of our new investments are indexed to SOFR; however, we have material contracts that are indexed to USD-LIBOR and are monitoring this activity, evaluating the related risks and our exposure, and adding alternative language to contracts, where necessary. Certain contracts have an orderly market transition already in process. However, it is not possible to predict the effect of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for LIBOR-based financial instruments.

 

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Key Components of Our Results of Operations

Investments

We focus primarily on the direct origination of loans to middle market companies domiciled in the United States.

Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.

In addition, as part of our risk strategy on investments, we may reduce the levels of certain investments through partial sales or syndication to additional lenders.

Revenues

We generate revenues primarily in the form of interest income from the investments we hold. In addition, we may generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. Our debt investments typically have a term of three to ten years. As of March 31, 2022, 98.8% of our debt investments based on fair value bear interest at a floating rate, subject to interest rate floors, in certain cases. Interest on our debt investments is generally payable either monthly or quarterly.

Our investment portfolio consists primarily of floating rate loans, and our credit facilities bear interest at floating rates. Macro trends in base interest rates like London Interbank Offered Rate (“LIBOR”), the Secured Overnight Financing Rate ("SOFR") and any alternative reference rates may affect our net investment income over the long term. However, because we generally originate loans to a small number of portfolio companies each quarter, and those investments vary in size, our results in any given period, including the interest rate on investments that were sold or repaid in a period compared to the interest rate of new investments made during that period, often are idiosyncratic, and reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macro trends.

Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts under U.S. generally accepted accounting principles (“U.S. GAAP”) as interest income using the effective yield method for term instruments and the straight-line method for revolving or delayed draw instruments. Repayments of our debt investments can reduce interest income from period to period. The frequency or volume of these repayments may fluctuate significantly. We record prepayment premiums on loans as interest income. We may also generate revenue in the form of commitment, loan origination, structuring, or due diligence fees, fees for providing managerial assistance to our portfolio companies and possibly consulting fees. Certain of these fees may be capitalized and amortized as additional interest income over the life of the related loan.

Dividend income on equity investments is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded companies.

Our portfolio activity will also reflect the proceeds from sales of investments. We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized gains (losses) on investments in the Consolidated Statements of Operations.

Expenses

Our primary operating expenses include the payment of the management fee, expenses reimbursable under the Administration Agreement and Investment Advisory Agreement, legal and professional fees, interest and other debt expenses and other operating expenses. The management fee compensates our Adviser for work in identifying, evaluating, negotiating, closing, monitoring and realizing our investments. The Adviser will not be entitled to an incentive fee prior to an Exchange Listing.

Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory and management services to us, the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser. In addition, the Adviser shall be solely responsible for any placement or “finder’s” fees payable to placement agents engaged by the Company or its affiliates in connection with the offering of securities by the Company. We bear our allocable portion of the costs of the compensation, benefits and related administrative expenses (including travel expenses) of our officers who provide operational and administrative services hereunder, their respective staffs and other professionals who provide services to us (including, in each case, employees of the Adviser or an affiliate) who assist with the preparation, coordination, and administration of the foregoing or provide other “back office” or “middle office” financial or operational services to us. We shall reimburse the Adviser (or its affiliates) for an allocable portion of the compensation paid by the Adviser (or its affiliates) to such individuals (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs and in acting on our behalf). We also will bear all other costs and expenses of our operations, administration and transactions, including, but not limited to (i) investment advisory fees, including management fees and incentive

 

73

 

fees, to the Adviser, pursuant to the Investment Advisory Agreement; (ii) our allocable portion of overhead and other expenses incurred by the Adviser in performing its administrative obligations under the Investment Advisory Agreement and the Administration Agreement; and (iii) all other costs and expenses of our operations and transactions including, without limitation, those relating to:

•
the cost of our organization and any offerings;
•
the cost of calculating our net asset value, including the cost of any third-party valuation services;
•
the cost of effecting any sales and repurchases of our common stock and other securities;
•
fees and expenses payable under any dealer manager agreements, if any;
•
debt service and other costs of borrowings or other financing arrangements;
•
costs of hedging;
•
expenses, including travel expense, incurred by the Adviser, or members of the investment team, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, enforcing our rights;
•
escrow agent, transfer agent and custodial fees and expenses;
•
fees and expenses associated with marketing efforts;
•
federal and state registration fees, any stock exchange listing fees and fees payable to rating agencies;
•
federal, state and local taxes;
•
independent directors’ fees and expenses including certain travel expenses;
•
costs of preparing financial statements and maintaining books and records and filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, including registration fees, listing fees and licenses, and the compensation of professionals responsible for the preparation of the foregoing;
•
the costs of any reports, proxy statements or other notices to our shareholders (including printing and mailing costs), the costs of any shareholder or director meetings and the compensation of personnel responsible for the preparation of the foregoing and related matters;
•
commissions and other compensation payable to brokers or dealers;
•
research and market data;
•
fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;
•
direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;
•
fees and expenses associated with independent audits, outside legal and consulting costs;
•
costs of winding up;
•
costs incurred in connection with the formation or maintenance of entities or vehicles to hold our assets for tax or other purposes;
•
extraordinary expenses (such as litigation or indemnification); and
•
costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws.

We expect, but cannot ensure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets during such periods.

Leverage

The amount of leverage we use in any period depends on a variety of factors, including cash available for investing, the cost of financing and general economic and market conditions. On June 4, 2020, we received shareholder approval that allows us to reduce our asset coverage ratio from 200% to 150% effective as of June 5, 2020. As a result, we are generally permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to the common stock if our asset coverage, as defined in the 1940 Act, would at least be equal to 150% immediately after each such issuance. This reduced asset coverage ratio permits us to double the amount of leverage we can incur. For example, under a 150% asset coverage ratio we may borrow $2 for investment purposes of every $1 of investor equity whereas under a 200% asset coverage ratio we may only borrow $1 for investment purposes for every $1 of investor equity. Our current target leverage ratio is 0.90x-1.25x debt-to-equity. As of March 31, 2022, we had net leverage of 0.75x debt-to-equity.

 

74

 

In any period, our interest expense will depend largely on the extent of our borrowing and we expect interest expense will increase as we increase our leverage over time subject to the limits of the 1940 Act. In addition, we may dedicate assets to financing facilities.

Market Trends

We believe the middle-market lending environment provides opportunities for us to meet our goal of making investments that generate attractive risk-adjusted returns.

Limited Availability of Capital for Middle-Market Companies. We believe that regulatory and structural changes in the market have reduced the amount of capital available to U.S. middle-market companies. In particular, we believe there are currently fewer providers of capital to middle market companies. We believe that many commercial and investment banks have, in recent years, de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital markets transactions. In addition, these lenders may be constrained in their ability to underwrite and hold bank loans and high yield securities for middle-market issuers as they seek to meet existing and future regulatory capital requirements. We also believe that there is a lack of market participants that are willing to hold meaningful amounts of certain middle-market loans. As a result, we believe our ability to minimize syndication risk for a company seeking financing by being able to hold its loans without having to syndicate them, coupled with reduced capacity of traditional lenders to serve the middle-market, present an attractive opportunity to invest in middle-market companies.

Capital Markets Have Been Unable to Fill the Void in U.S. Middle Market Finance Left by Banks. While underwritten bond and syndicated loan markets have been robust in recent years, middle market companies are less able to access these markets for reasons including the following:

High Yield Market – Middle market companies generally are not issuing debt in an amount large enough to be an attractively sized bond. High yield bonds are generally purchased by institutional investors who, among other things, are focused on the liquidity characteristics of the bond being issued. For example, mutual funds and exchange traded funds (“ETFs”) are significant buyers of underwritten bonds. However, mutual funds and ETFs generally require the ability to liquidate their investments quickly in order to fund investor redemptions and/or comply with regulatory requirements. Accordingly, the existence of an active secondary market for bonds is an important consideration in these entities’ initial investment decision. Because there is typically little or no active secondary market for the debt of U.S. middle market companies, mutual funds and ETFs generally do not provide debt capital to U.S. middle market companies. We believe this is likely to be a persistent problem and creates an advantage for those like us who have a more stable capital base and have the ability to invest in illiquid assets.

Syndicated Loan Market – While the syndicated loan market is modestly more accommodating to middle market issuers, as with bonds, loan issue size and liquidity are key drivers of institutional appetite and, correspondingly, underwriters’ willingness to underwrite the loans. Loans arranged through a bank are done either on a “best efforts” basis or are underwritten with terms plus provisions that permit the underwriters to change certain terms, including pricing, structure, yield and tenor, otherwise known as “flex”, to successfully syndicate the loan, in the event the terms initially marketed are insufficiently attractive to investors. Furthermore, banks are generally reluctant to underwrite middle market loans because the arrangement fees they may earn on the placement of the debt generally are not sufficient to meet the banks’ return hurdles. Loans provided by companies such as ours provide certainty to issuers in that we can commit to a given amount of debt on specific terms, at stated coupons and with agreed upon fees. As we are the ultimate holder of the loans, we do not require market “flex” or other arrangements that banks may require when acting on an agency basis.

Robust Demand for Debt Capital. We believe U.S. middle market companies will continue to require access to debt capital to refinance existing debt, support growth and finance acquisitions. In addition, we believe the large amount of uninvested capital held by funds of private equity firms broadly, estimated by Preqin Ltd., an alternative assets industry data and research company, to be $1.7 trillion as of January 2022, will continue to drive deal activity. We expect that private equity sponsors will continue to pursue acquisitions and leverage their equity investments with secured loans provided by companies such as us.

The Middle Market is a Large Addressable Market. According to GE Capital’s National Center for the Middle Market 2nd quarter 2021 Middle Market Indicator, there are approximately 200,000 U.S. middle market companies, which have approximately 48 million aggregate employees. Moreover, the U.S. middle market accounts for one-third of private sector gross domestic product (“GDP”). GE defines U.S. middle market companies as those between $10 million and $1 billion in annual revenue, which we believe has significant overlap with our definition of U.S. middle market companies.

Attractive Investment Dynamics. An imbalance between the supply of, and demand for, middle market debt capital creates attractive pricing dynamics. We believe the directly negotiated nature of middle market financings also generally provides more favorable terms to the lender, including stronger covenant and reporting packages, better call protection, and lender-protective change of control provisions. Additionally, we believe BDC managers’ expertise in credit selection and ability to manage through credit cycles has generally resulted in BDCs experiencing lower loss rates than U.S. commercial banks through credit cycles. Further, we believe that historical middle market default rates have been lower, and recovery rates have been higher, as compared to the larger market capitalization, broadly distributed market, leading to lower cumulative losses. Lastly, we believe that in the current

 

75

 

environment, lenders with available capital may be able to take advantage of attractive investment opportunities as the economy reopens and may be able to achieve improved economic spreads and documentation terms.

Conservative Capital Structures. Following the credit crisis, which we define broadly as occurring between mid-2007 and mid-2009, lenders have generally required borrowers to maintain more equity as a percentage of their total capitalization, specifically to protect lenders during economic downturns. With more conservative capital structures, U.S. middle market companies have exhibited higher levels of cash flows available to service their debt. In addition, U.S. middle market companies often are characterized by simpler capital structures than larger borrowers, which facilitates a streamlined underwriting process and, when necessary, restructuring process.

Attractive Opportunities in Investments in Loans. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities. We believe that opportunities in senior secured loans are significant because of the floating rate structure of most senior secured debt issuances and because of the strong defensive characteristics of these types of investments. We believe that debt issues with floating interest rates offer a superior return profile as compared with fixed-rate investments, since floating rate structures are generally less susceptible to declines in value experienced by fixed-rate securities in a rising interest rate environment. Senior secured debt also provides strong defensive characteristics. Senior secured debt has priority in payment among an issuer’s security holders whereby holders are due to receive payment before junior creditors and equity holders. Further, these investments are secured by the issuer’s assets, which may provide protection in the event of a default.

Portfolio and Investment Activity

As of March 31, 2022, based on fair value, our portfolio consisted of 79.1% first lien senior secured debt investments (of which 71.5% we consider to be unitranche debt investments (including “last out” portions of such loans)), 13.9% second lien senior secured debt investments, 1.6% unsecured debt investments, 2.8% preferred equity investments and 2.6% common equity investments.

As of March 31, 2022, our weighted average total yield of the portfolio at fair value and amortized cost was 7.6% and 7.6%, respectively, and our weighted average yield of accruing debt and income producing securities at fair value and amortized cost was 7.8% and 7.7%, respectively.

As of March 31, 2022, we had investments in 103 portfolio companies with an aggregate fair value of $2.9 billion.

Based on current market conditions, the pace of our investment activities, including originations and repayments, may vary. The strength of the financing and merger and acquisitions markets, and the current low interest rate environment has led to increased originations and an active pipeline of investment opportunities including demand for large unitranche debt investments. However, there have been headwinds in the financing and merger and acquisitions markets resulting from high and persistent inflation, a shifting interest rate environment, geopolitical events and the ongoing impact from COVID-19 globally. We are monitoring the effect that market volatility, including as a result of a rising interest rate environment, may have on our portfolio companies and our investment activities and we will continue to seek to invest in recession-resistant industries that we are familiar with.

 

76

 

Our investment activity for the three months ended March 31, 2022 and 2021 is presented below (information presented herein is at par value unless otherwise indicated).

 

 

 

For the Three Months Ended March 31,

 

 

($ in thousands)

 

2022

 

 

2021

 

 

New investment commitments

 

 

 

 

 

 

 

Gross originations

 

$

84,897

 

 

$

183,304

 

 

Less: Sell downs

 

 

(45

)

 

 

—

 

 

Total new investment commitments

 

$

84,852

 

 

$

183,304

 

 

Principal amount of investments funded:

 

 

 

 

 

 

 

First-lien senior secured debt investments

 

$

62,805

 

 

$

95,301

 

 

Second-lien senior secured debt investments

 

 

1,000

 

 

 

5,000

 

 

Unsecured debt investments

 

 

997

 

 

 

25,065

 

 

Preferred equity investments(1)

 

 

2,000

 

 

 

—

 

 

Common equity investments(1)

 

 

651

 

 

 

1,370

 

 

Total principal amount of investments funded

 

$

67,453

 

 

$

126,736

 

 

Principal amount of investments sold or repaid:

 

 

 

 

 

 

 

First-lien senior secured debt investments

 

$

(52,389

)

 

$

(33,272

)

 

Second-lien senior secured debt investments

 

 

—

 

 

 

(5,910

)

 

Preferred equity investments

 

 

(3,807

)

 

 

—

 

 

Total principal amount of investments sold or repaid

 

$

(56,196

)

 

$

(39,182

)

 

Number of new investment commitments in new portfolio companies(2)

 

 

18

 

 

 

7

 

 

Average new investment commitment amount

 

$

3,788

 

 

$

25,472

 

 

Weighted average term for new debt investment commitments (in years)

 

 

5.2

 

 

 

4.8

 

 

Percentage of new debt investment commitments at
   floating rates

 

 

97.0

%

 

 

100.0

%

 

Percentage of new debt investment commitments at
   fixed rates

 

 

3.0

%

 

 

0.0

%

 

Weighted average interest rate of new debt investment
   commitments(3)

 

 

7.7

%

 

 

7.3

%

 

Weighted average spread over LIBOR of new floating rate debt investment commitments

 

 

6.6

%

 

 

6.4

%

 

________________

(1)
As of March 31, 2021, Preferred and Common equity investments were reported in aggregate as Equity investments.
(2)
Number of new investment commitments represents commitments to a particular portfolio company.
(3)
Assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month LIBOR, which was 0.96% and 0.19% as of March 31, 2022 and 2021, respectively.

 

As of March 31, 2022 and December 31, 2021, our investments consisted of the following:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

($ in thousands)

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

 

First lien senior secured debt investments

 

 

2,321,498

 

 

 

2,311,913

 

(1)

 

2,282,500

 

 

 

2,285,599

 

(1)

Second-lien senior secured debt investments

 

 

407,674

 

 

 

406,551

 

 

 

406,308

 

 

 

407,932

 

 

Unsecured debt investments

 

 

48,699

 

 

 

47,214

 

 

 

46,687

 

 

 

46,620

 

 

Preferred equity investments

 

 

82,150

 

 

 

81,700

 

 

 

82,903

 

 

 

83,788

 

 

Common equity investments

 

 

72,532

 

 

 

75,477

 

 

 

71,431

 

 

 

73,098

 

 

Total Investments

 

$

2,932,553

 

 

$

2,922,855

 

 

$

2,889,829

 

 

$

2,897,037

 

 

________________

(1)
71.5% and 67.1% of which we consider unitranche loans as of March 31, 2022 and December 31, 2021, respectively.

 

77

 

 

The table below describes investments by industry composition based on fair value as of March 31, 2022 and December 31, 2021:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

Advertising and media

 

 

2.8

 

%

 

2.8

 

%

Aerospace and defense

 

 

0.5

 

 

 

0.5

 

 

Automotive

 

 

2.3

 

 

 

2.3

 

 

Buildings and real estate

 

 

3.0

 

 

 

3.4

 

 

Business services

 

 

6.4

 

 

 

6.8

 

 

Chemicals

 

 

2.8

 

 

 

2.9

 

 

Consumer products

 

 

3.5

 

 

 

3.8

 

 

Containers and packaging

 

 

3.6

 

 

 

3.6

 

 

Distribution

 

 

2.0

 

 

 

1.5

 

 

Education

 

 

0.7

 

 

 

0.7

 

 

Financial services

 

 

6.3

 

 

 

6.3

 

 

Food and beverage

 

 

4.2

 

 

 

3.5

 

 

Healthcare equipment and services

 

 

3.5

 

 

 

3.5

 

 

Healthcare providers and services

 

 

6.8

 

 

 

7.6

 

 

Healthcare technology

 

 

7.2

 

 

 

6.9

 

 

Household products

 

 

0.8

 

 

 

0.8

 

 

Human resource support services

 

 

4.3

 

 

 

4.4

 

 

Infrastructure and environmental services

 

 

-

 

 

 

-

 

 

Insurance

 

 

10.1

 

 

 

10.1

 

 

Internet software and services

 

 

14.9

 

 

 

14.4

 

 

Leisure and entertainment

 

 

2.4

 

 

 

2.4

 

 

Manufacturing

 

 

3.4

 

 

 

3.5

 

 

Professional services

 

 

2.3

 

 

 

2.2

 

 

Specialty retail

 

 

5.6

 

 

 

5.5

 

 

Telecommunications

 

 

0.3

 

 

 

0.3

 

 

Transportation

 

 

0.3

 

 

 

0.3

 

 

Total

 

 

100.0

 

%

 

100.0

 

%

 

The table below describes investments by geographic composition based on fair value as of March 31, 2022 and December 31, 2021:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

United States:

 

 

 

 

 

 

 

Midwest

 

 

21.0

 

%

 

20.7

 

%

Northeast

 

 

17.0

 

 

 

16.9

 

 

South

 

 

29.4

 

 

 

30.7

 

 

West

 

 

24.2

 

 

 

23.3

 

 

International

 

 

8.4

 

 

 

8.4

 

 

Total

 

 

100.0

 

%

 

100.0

 

%

 

The weighted average yields and interest rates of our investments at fair value as of March 31, 2022 and December 31, 2021 were as follows:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

Weighted average total yield of portfolio

 

 

7.6

 

%

 

7.4

 

%

Weighted average total yield of debt and income producing
   securities

 

 

7.8

 

%

 

7.6

 

%

Weighted average interest rate of debt securities

 

 

7.3

 

%

 

7.2

 

%

Weighted average spread over LIBOR of all floating rate
   investments

 

 

6.4

 

%

 

6.4

 

%

 

The weighted average yield of our debt and income producing securities is not the same as a return on investment for our shareholders but, rather, relates to our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yield was computed using the effective interest rates as of each respective date, including

 

78

 

accretion of original issue discount and loan origination fees, but excluding investments on non-accrual status, if any. There can be no assurance that the weighted average yield will remain at its current level.

Our Adviser monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action with respect to each portfolio company. Our Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

•
assessment of success of the portfolio company in adhering to its business plan and compliance with covenants;
•
periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and accomplishments;
•
comparisons to other companies in the portfolio company’s industry; and
•
review of monthly or quarterly financial statements and financial projections for portfolio companies.

As part of the monitoring process, our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser rates the credit risk of all investments on a scale of 1 to 5. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The rating system is as follows:

 

Investment Rating

 

Description

1

 

Investments rated 1 involve the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since origination or acquisition are generally favorable;

 

2

 

Investments rated 2 involve an acceptable level of risk that is similar to the risk at the time of origination or acquisition. The borrower is generally performing as expected and the risk factors are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a rating of 2;

 

3

 

Investments rated 3 involve a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination or acquisition;

 

4

 

Investments rated 4 involve a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination or acquisition. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due); and

 

5

 

Investments rated 5 involve a borrower performing substantially below expectations and indicates that the loan’s risk has increased substantially since origination or acquisition. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.

Our Adviser rates the investments in our portfolio at least quarterly and it is possible that the rating of a portfolio investment may be reduced or increased over time. For investments rated 3, 4 or 5, our Adviser enhances its level of scrutiny over the monitoring of such portfolio company.

 

79

 

The following table shows the composition of our portfolio on the 1 to 5 rating scale as of March 31, 2022 and December 31, 2021:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

Investment Rating

 

Investments
at Fair Value

 

 

Percentage of
Total Portfolio

 

 

Investments
at Fair Value

 

 

Percentage of
Total Portfolio

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

$

159,405

 

 

 

5.4

 

%

$

105,702

 

 

 

3.7

 

%

2

 

 

2,711,646

 

 

 

92.8

 

 

 

2,755,637

 

 

 

95.1

 

 

3

 

 

51,804

 

 

 

1.8

 

 

 

35,698

 

 

 

1.2

 

 

4

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

5

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

Total

 

$

2,922,855

 

 

 

100.0

 

%

$

2,897,037

 

 

 

100.0

 

%

 

The following table shows the amortized cost of our performing and non-accrual debt investments as of March 31, 2022 and December 31, 2021:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

($ in thousands)

 

Amortized Cost

 

 

Percentage

 

 

Amortized Cost

 

 

Percentage

 

 

Performing

 

$

2,777,871

 

 

 

100.0

 

%

$

2,735,495

 

 

 

100.0

 

%

Non-accrual

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

Total

 

$

2,777,871

 

 

 

100.0

 

%

$

2,735,495

 

 

 

100.0

 

%

 

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

 

Results of Operations

The following table represents the operating results for the three months ended March 31, 2022 and 2021:

 

 

 

For the Three Months Ended March 31,

 

 

($ in millions)

 

2022

 

 

2021

 

 

Total Investment Income

 

$

56.3

 

 

$

10.2

 

 

Less: Operating expenses

 

 

15.0

 

 

 

3.2

 

 

Net Investment Income (Loss) Before Taxes

 

 

41.3

 

 

 

7.0

 

 

Less: Income taxes (benefit), including excise taxes

 

 

0.4

 

 

 

-

 

 

Net Investment Income (Loss) After Taxes

 

$

40.9

 

 

$

7.0

 

 

Net change in unrealized gain (loss)

 

 

(15.5

)

 

 

1.6

 

 

Net realized gain (loss)

 

 

0.9

 

 

 

0.2

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

$

26.3

 

 

$

8.8

 

 

 

Net increase (decrease) in net assets resulting from operations can vary from period to period as a result of various factors, including the level of new investment commitments, expenses, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. For the quarter ended March 31, 2022, our net asset value per share decreased slightly, primarily driven by market spreads widening.

 

80

 

Investment Income

Investment income for the three months ended March 31, 2022 and 2021 was as follows:

 

 

 

For the Three Months Ended March 31,

 

 

($ in millions)

 

2022

 

 

2021

 

 

Interest income (excluding PIK interest income)

 

$

46.5

 

 

$

9.0

 

 

PIK interest income

 

 

6.6

 

 

 

0.9

 

 

Other income

 

 

3.2

 

 

 

0.3

 

 

Total investment income

 

$

56.3

 

 

$

10.2

 

 

 

We generate revenues primarily in the form of interest income from the investments we hold. In addition, we may generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights.

For the three months ended March 31, 2022 and 2021

Investment income increased by $46.1 million for the three months ended March 31, 2022 primarily due to an increase in interest income as a result of an increase in our debt investment portfolio which, at par, increased from $513.0 million as of March 31, 2021, to $2.8 billion as of March 31, 2022. Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns. Income generated from these fees was $1.1 million for the three months ended March 31, 2022. For the three months ended March 31, 2022, income generated from one-time prepayment fees was $0.5 million. Other income increased period-over-period due to an increase in incremental fee income, which are fees that are generally available to us as a result of closing investments and generally paid at the time of closing, and an increase in dividend income driven by an increase in our portfolio of dividend income-producing investments. Payment-in-kind interest and dividend income represented approximately 15.2% and 10.4% of investment income for the three months ended March 31, 2022 and 2021, respectively. We expect that investment income will vary based on a variety of factors including the pace of our originations and repayments.

 

Expenses

Expenses for the three months ended March 31, 2022 and 2021 were as follows:

 

 

 

For the Three Months Ended March 31,

 

 

($ in millions)

 

2022

 

 

2021

 

 

Interest expense

 

 

9.4

 

 

 

1.4

 

 

Management fee

 

 

3.7

 

 

 

0.5

 

 

Professional fees

 

 

1.0

 

 

 

0.5

 

 

Directors' fees

 

 

0.3

 

 

 

0.3

 

 

Other general and administrative

 

 

0.6

 

 

 

0.4

 

 

Total operating expenses

 

$

15.0

 

 

$

3.1

 

 

 

Under the terms of the Administration Agreement, we reimburse the Adviser for services performed for us. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and we reimburse the Adviser for any services performed for us by such affiliate or third party.

For the three months ended March 31, 2022 and 2021

Total expenses increased by $11.9 million for the three months ended March 31, 2022 due to an increase in management fees, interest expense and other expenses of $3.2 million, $7.9 million and $0.8 million, respectively. The increase in interest expense was driven by an increase in average daily borrowings to $1.3 billion from $0.2 billion period over period. Management fees increased primarily due to an increase in our investment portfolio, which at fair value, increased from $519.3 million as of March 31, 2021, to $2.9 billion as of March 31, 2022.

Income Taxes, Including Excise Taxes

We have elected to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, we must, among other things, distribute to our shareholders in each taxable year generally at least 90% of our investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our shareholders, which generally relieves us from corporate-level U.S. federal income taxes.

 

81

 

Depending on the level of taxable income earned in a tax year, we can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, we will accrue excise tax on estimated excess taxable income.

For the three months ended March 31, 2022, we accrued U.S. federal excise tax of $413.3 thousand. For the three months ended March 31, 2021, we accrued U.S. federal excise tax of $33.0 thousand.

Net Change in Unrealized Gains (Losses)

We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the three months ended March 31, 2022 and 2021, net change in unrealized gains (losses) were comprised of the following:

 

 

 

For the Three Months Ended March 31,

 

 

($ in millions)

 

2022

 

 

2021

 

 

Net change in unrealized gain (loss) on investments

 

$

(15.5

)

 

$

1.8

 

 

Net change in translation of assets and liabilities in
     foreign currencies

 

 

(0.0

)

 

 

(0.2

)

 

Net change in unrealized gain (loss)

 

$

(15.5

)

 

$

1.6

 

 

For the three months ended March 31, 2022 and 2021

For the three months ended March 31, 2022, the net change in unrealized gain (loss) was primarily driven by a decrease in the fair value of our debt investments as compared to December 31, 2021. As of March 31, 2022, the fair value of our debt investments as a percentage of principal was 98.1%, as compared to 98.6% as of December 31, 2021. The primary driver of our portfolio’s unrealized loss was due to current market conditions and credit spreads widening.

The ten largest contributors to the change in net unrealized gain (loss) on investments during the three months ended March 31, 2022 consisted of the following:

 

Portfolio Company
($ in millions)

 

Net Change in Unrealized
Gain (Loss)

 

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)

 

$

1.4

 

Walker Edison Furniture Company LLC

 

 

(1.0

)

Packaging Coordinators Midco, Inc.

 

 

(0.8

)

Lignetics Investment Corp.

 

 

(0.7

)

Metis HoldCo, Inc.

 

 

(0.5

)

WMC Bidco, Inc. (dba West Monroe)

 

 

(0.5

)

Alera Group, Inc.

 

 

(0.5

)

Thunder Purchaser, Inc. (dba Vector Solutions)

 

 

(0.5

)

Parexel International, Inc. (dba Parexel)

 

 

(0.4

)

Cornerstone OnDemand, Inc.

 

 

(0.4

)

Remaining portfolio companies

 

 

(11.6

)

Total

 

$

(15.5

)

Net Realized Gains (Losses)

The realized gains and losses on fully exited portfolio companies, partially exited portfolio companies and foreign currency transactions during the three months ended March 31, 2022 and 2021 were comprised of the following:

 

 

 

For the Three Months Ended March 31,

 

 

($ in millions)

 

2022

 

 

2021

 

 

Net realized gain (loss) on investments

 

$

0.9

 

 

$

-

 

 

Net realized gain (loss) on foreign currency transactions

 

 

-

 

 

 

0.2

 

 

Net realized gain (loss)

 

$

0.9

 

 

$

0.2

 

 

 

Realized Gross Internal Rate of Return

 

82

 

Since we began investing in 2020 through March 31, 2022, our exited investments have resulted in an aggregate cash flow realized gross internal rate of return to us of approximately 15.2% (based on total capital invested of $164.6 million and total proceeds from these exited investments of $177.4 million). Eighty-seven percent of these exited investments resulted in an aggregate cash flow realized gross internal rate of return (“IRR”) to us of 10% or greater.

IRR, is a measure of our discounted cash flows (inflows and outflows). Specifically, IRR is the discount rate at which the net present value of all cash flows is equal to zero. That is, IRR is the discount rate at which the present value of total capital invested in each of our investments is equal to the present value of all realized returns from that investment. Our IRR calculations are unaudited.

Capital invested, with respect to an investment, represents the aggregate cost basis allocable to the realized or unrealized portion of the investment, net of any upfront fees paid at closing for the term loan portion of the investment.

Realized returns, with respect to an investment, represents the total cash received with respect to each investment, including all amortization payments, interest, dividends, prepayment fees, upfront fees (except upfront fees paid at closing for the term loan portion of an investment), administrative fees, agent fees, amendment fees, accrued interest, and other fees and proceeds.

Gross IRR, with respect to an investment, is calculated based on the dates that we invested capital and dates we received distributions, regardless of when we made distributions to our shareholders. Initial investments are assumed to occur at time zero.

Gross IRR reflects historical results relating to our past performance and is not necessarily indicative of our future results. In addition, gross IRR does not reflect the effect of management fees, expenses, incentive fees or taxes borne, or to be borne, by us or our shareholders, and would be lower if it did.

Aggregate cash flow realized gross IRR on our exited investments reflects only invested and realized cash amounts as described above, and does not reflect any unrealized gains or losses in our portfolio.

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are generated primarily from the proceeds of capital drawdowns of our privately placed Capital Commitments, cash flows from interest and fees earned from our investments and principal repayments, our credit facilities, and other secured and unsecured debt. The primary uses of our cash are (i) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements, (ii) the cost of operations (including paying or reimbursing our Adviser), (iii) debt service, repayment and other financing costs of any borrowings and (iv) cash distributions to the holders of our shares.

We may from time to time enter into additional debt facilities, increase the size of our existing credit facilities or issue additional debt securities. Additional financings could include SPV drop down facilities and unsecured notes. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 150%. As of March 31, 2022, our asset coverage ratio was 228%. We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage. Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation to cover any outstanding unfunded commitments we are required to fund.

Cash as of March 31, 2022, taken together with our uncalled Capital Commitments of $50.1 million and available debt capacity of $501.7 million, is expected to be sufficient for our investing activities and to conduct our operations in the near term. Our long-term cash needs will include principal payments on outstanding indebtedness and funding of additional portfolio investments. Fund for long-term cash needs will come from unused net proceeds from financing activities. We believe that our liquidity and sources of capital are adequate to satisfy our short and long-term cash requirements. We cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to us in sufficient amounts in the future.

As of March 31, 2022, we had $42.6 million in cash. During the three months ended March 31, 2022, cash provided by operating activity was $2.8 million, primarily as a result of sales and repayments of $80.2 million and other operating activity of $34.7 million, partially offset by funding portfolio investments of $112.1 million. Lastly, cash provided by financing activities was $12.6 million during the period, which was the result of proceeds from net borrowings on our credit facilities, net of debt issuance costs, of $36.6 million, partially offset by distributions paid of $24.0 million.

Equity

Subscriptions and Drawdowns

In connection with our formation, we have the authority to issue 500,000,000 common shares at $0.01 per share par value.

On June 4, 2020, the Company issued 100 common shares for $1,500 to Owl Rock Diversified Advisors LLC.

 

83

 

We have entered into subscription agreements (the “Subscription Agreements”) with investors providing for the private placement of our common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase our common shares up to the amount of their respective Capital Commitment on an as-needed basis each time we deliver a drawdown notice to our investors.

During the three months ended March 31, 2022 and 2021, we did not deliver capital call notices to investors.

Distributions

The following table reflects the distributions declared on shares of our common stock during the three months ended March 31, 2022:

 

 

 

March 31, 2022

 

Date Declared

 

Record Date

 

Payment Date

 

Distribution per Share

 

February 23, 2022

 

March 31, 2022

 

May 13, 2022

 

$

0.33

 

The following table reflects the distributions declared on shares of our common stock during the three months ended March 31, 2021:

 

 

March 31, 2021

 

Date Declared

 

Record Date

 

Payment Date

 

Distribution per Share

 

February 23, 2021

 

March 31, 2021

 

May 14, 2021

 

$

0.33

 

Dividend Reinvestment

With respect to distributions, we adopted an “opt out” dividend reinvestment plan for common shareholders. As a result, in the event of a declared distribution, each shareholder that has not “opted out” of the dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of our common stock rather than receiving cash distributions.

Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the three months ended March 31, 2022:

 

Date Declared

 

Record Date

 

Payment Date

 

Shares

 

November 2, 2021

 

December 31, 2021

 

January 31, 2022

 

 

382,099

 

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the three months ended March 31, 2021:

 

Date Declared

 

Record Date

 

Payment Date

 

Shares

 

December 31, 2020

 

December 31, 2020

 

January 29, 2021

 

 

30,532

 

Debt

Aggregate Borrowings

Debt obligations consisted of the following as of March 31, 2022 and December 31, 2021:

 

 

 

March 31, 2022

 

($ in thousands)

 

Aggregate Principal Committed

 

 

Outstanding Principal

 

 

Amount Available(1)

 

 

Net Carrying Value(2)

 

Revolving Credit Facility(3)

 

$

450,000

 

 

$

160,250

 

 

$

289,750

 

 

$

156,174

 

SPV Asset Facility I

 

$

625,000

 

 

$

575,000

 

 

$

46,679

 

 

$

568,717

 

SPV Asset Facility II

 

$

350,000

 

 

$

230,000

 

 

$

15,307

 

 

$

227,421

 

2027 Notes

 

$

325,000

 

 

$

325,000

 

 

$

-

 

 

$

321,071

 

Promissory Note

 

$

150,000

 

 

$

-

 

 

$

150,000

 

 

$

-

 

Total Debt

 

$

1,900,000

 

 

$

1,290,250

 

 

$

501,736

 

 

$

1,273,383

 

 

 

84

 

________________

(1)
The amount available reflects any limitations related to each credit facility’s borrowing base.
(2)
The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, and 2027 Notes are presented net of deferred financing costs of $4.1 million, $6.3 million, $2.6 million, and $3.9 million, respectively.
(3)
Includes the unrealized translation gain (loss) on borrowings denominated in foreign currencies.

 

 

 

December 31, 2021

 

($ in thousands)

 

Aggregate Principal Committed

 

 

Outstanding Principal

 

 

Amount Available(1)

 

 

Net Carrying Value(2)

 

Revolving Credit Facility(3)

 

$

450,000

 

 

$

215,656

 

 

$

234,344

 

 

$

211,373

 

SPV Asset Facility I

 

$

625,000

 

 

$

575,000

 

 

$

24,665

 

 

$

572,676

 

SPV Asset Facility II

 

$

350,000

 

 

$

135,000

 

 

$

15,139

 

 

$

132,286

 

2027 Notes

 

$

325,000

 

 

$

325,000

 

 

$

-

 

 

$

321,151

 

Promissory Note

 

$

250,000

 

 

$

-

 

 

$

250,000

 

 

$

-

 

Total Debt

 

$

2,000,000

 

 

$

1,250,656

 

 

$

524,148

 

 

$

1,237,486

 

________________

(1)
The amount available reflects any limitations related to each credit facility’s borrowing base.
(2)
The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, and 2027 Notes are presented net of deferred financing costs of $4.3 million,$2.3 million, $2.7 million, and $3.8 million, respectively.
(3)
Includes the unrealized translation gain (loss) on borrowings denominated in foreign currencies.

 

For the three months ended March 31, 2022 and 2021, the components of interest expense were as follows:

 

 

 

For the Three Months Ended March 31,

 

 

($ in thousands)

 

2022

 

 

2021

 

 

Interest expense

 

$

8,600

 

 

$

1,095

 

 

Amortization of debt issuance costs

 

 

740

 

 

 

337

 

 

Total Interest Expense

 

$

9,340

 

 

$

1,432

 

 

Average interest rate

 

 

2.7

 

%

 

2.6

 

%

Average daily borrowings

 

$

1,274,674

 

 

$

169,473

 

 

 

Senior Securities

Information about our senior securities is shown in the following table as of March 31, 2022 and the fiscal years ended December 31, 2021 and 2020.

 

 

85

 

Class and Period

 

Total Amount Outstanding Exclusive of Treasury Securities(1)
($ in millions)

 

 

Asset Coverage per Unit(2)

 

 

Involuntary Liquidating Preference per Unit(3)

 

 

Average Market Value per Unit(4)

Subscription Credit Facility(5)

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

$

-

 

 

$

-

 

 

 

—

 

 

N/A

December 31, 2020

 

$

228.8

 

 

$

2,250

 

 

 

—

 

 

N/A

Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

$

160.2

 

 

$

2,282

 

 

 

—

 

 

N/A

December 31, 2021

 

$

215.7

 

 

$

2,331

 

 

 

—

 

 

N/A

SPV Asset Facility I

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

$

575.0

 

 

$

2,282

 

 

 

—

 

 

N/A

December 31, 2021

 

$

575.0

 

 

$

2,331

 

 

 

—

 

 

N/A

SPV Asset Facility II

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

$

230.0

 

 

$

2,282

 

 

 

—

 

 

N/A

December 31, 2021

 

$

135.0

 

 

$

2,331

 

 

 

—

 

 

N/A

2027 Notes

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

$

325.0

 

 

$

2,282

 

 

 

—

 

 

N/A

December 31, 2021

 

$

325.0

 

 

$

2,331

 

 

 

—

 

 

N/A

Promissory Note

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

$

-

 

 

$

2,282

 

 

 

—

 

 

N/A

December 31, 2021

 

$

-

 

 

$

2,331

 

 

 

—

 

 

N/A

________________

(1)
Total amount of each class of senior securities outstanding at the end of the period presented.
(2)
Asset coverage per unit is the ratio of the carrying value of our total assets, less all liabilities excluding indebtedness represented by senior securities in this table, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness and is calculated on a consolidated basis.
(3)
The amount to which such class of senior security would be entitled upon our involuntary liquidation in preference to any security junior to it. The "—" in this column indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.
(4)
Not applicable, as senior securities are not registered for public trading on a stock exchange.
(5)
Facility was terminated in 2021.

 

Credit Facilities

Revolving Credit Facility

On September 10, 2021, we entered into a senior secured revolving credit agreement (the “Revolving Credit Facility”). The Revolving Credit Facility became effective on September 13, 2021. The parties to the Revolving Credit Facility include us, as Borrower, the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”), the issuing banks from time to time parties thereto (each an "Issuing Bank" and collectively, the "Issuing Banks"), JPMorgan Chase Bank, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A., MUFG Union Bank, N.A. and Sumitomo Mitsui Banking Corporation as Joint Lead Arrangers and Joint Book Runners.

The Revolving Credit Facility is guaranteed by OR Lending III LLC, a subsidiary of ours, and will be guaranteed by certain domestic subsidiaries of ours that are formed or acquired by us in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.

The maximum principal amount of the Revolving Credit Facility is $450 million (increased from $375 million on December 22, 2021), subject to availability under the borrowing base, which is based on our portfolio investments and other outstanding indebtedness. Maximum capacity under the Revolving Credit Facility may be increased to $1.1 billion through the exercise by the Borrower of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility is secured by a perfected first-priority interest in substantially all of the portfolio investments held by us and each Guarantor, subject to certain exceptions, and includes a $50 million limit for swingline loans.

The availability period under the Revolving Credit Facility will terminate on September 9, 2025 (“Revolving Credit Facility Commitment Termination Date”) and the Revolving Credit Facility will mature on September 9, 2026 (“Revolving Credit Facility Maturity Date”). During the period from the Revolving Credit Facility Commitment Termination Date to the Revolving Credit Facility Maturity Date, we will be obligated to make mandatory prepayments under the Revolving Credit Facility out of the proceeds of certain asset sales and other recovery events and equity and debt issuances.

 

86

 

We may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility, will bear interest at either LIBOR plus a margin, or the prime rate plus a margin. We may elect either the LIBOR or prime rate at the time of drawdown, and loans may be converted from one rate to another at any time at our option, subject to certain conditions. Further, the Revolving Credit Facility builds in a hardwired approach for the replacement of LIBOR loans in U.S. dollars. For LIBOR loans in other permitted currencies, the Revolving Credit Facility includes customary fallback mechanics for us and the Administrative Agent to select an alternative benchmark, subject to the negative consent of required Lenders. We will also pay a fee of 0.375% on undrawn amounts under the Revolving Credit Facility.

The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to its shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default.

Subscription Credit Facility

On August 12, 2020 (the “Closing Date”), we entered into a revolving credit facility (the “Subscription Credit Facility”) with State Street Bank and Trust Company (“State Street”) as administrative agent (the “Administrative Agent”), and State Street and PNC Bank, National Association (“PNC”), as lenders.

The Subscription Credit Facility permitted the Company to borrow up to $550 million, subject to availability under the borrowing base, which was based on unused capital commitments. Effective November 12, 2021, the outstanding balance on the Subscription Credit Facility was paid in full and the facility was terminated pursuant to its terms.

Borrowings under the Subscription Credit Facility bore interest, at our election at the time of drawdown, at a rate per annum equal to (i) in the case of LIBOR rate loans, an adjusted LIBOR rate for the applicable interest period plus 2.00% or (ii) in the case of reference rate loans, the greatest of (A) a prime rate plus 1.00%, (B) the federal funds rate plus 1.50%, and (C) one-month LIBOR plus 1.00%. Loans were able to be converted from one rate to another at any time at our election, subject to certain conditions. We predominantly borrowed utilizing LIBOR loans, generally electing one-month LIBOR upon borrowing. We also paid an unused commitment fee of 0.25% per annum on the unused commitments.

SPV Asset Facilities

Certain of our wholly owned subsidiaries are parties to credit facilities (the “SPV Asset Facilities”). Pursuant to the SPV Asset Facilities, we sell and contribute certain investments to these wholly owned subsidiaries pursuant to sale and contribution agreements by and between us and the wholly owned subsidiaries. No gain or loss is recognized as a result of these contributions. Proceeds from the SPV Asset Facilities are used to finance the origination and acquisition of eligible assets by the wholly owned subsidiary, including the purchase of such assets from us. We retain a residual interest in assets contributed to or acquired to the wholly owned subsidiary through our ownership of the wholly owned subsidiary.

The SPV Asset Facilities are secured by a perfected first priority security interest in the assets of these wholly owned subsidiaries and on any payments received by such wholly owned subsidiaries in respect of those assets. Assets pledged to lenders under the SPV Asset Facilities will not be available to pay our debts.

The SPV Asset Facilities contain customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).

SPV Asset Facility I

On July 29, 2021 (the “SPV Asset Facility I Closing Date”), ORCC III Financing LLC (“ORCC III Financing”), a Delaware limited liability company and newly formed subsidiary entered into a Credit Agreement (as amended through the date hereof, the “SPV Asset Facility I”), with ORCC III Financing, as borrower, us, as equityholder, the Adviser, as collateral manager, the lenders from time to time parties thereto, Société Générale, as agent, State Street Bank and Trust Company, as collateral agent, collateral administrator and custodian, and Alter Domus (US) LLC as collateral custodian. The parties to the SPV Asset Facility I have entered into various amendments, including to admit new lenders, increase the maximum principal amount available under the facility, add a swingline commitment to the facility, extend the availability period and maturity date, change the interest rate and make various other changes. The following describes the terms of SPV Asset Facility I amended through March 16, 2022 (the “SPV Asset Facility I Third Amendment Date”).

From time to time, we expect to sell and contribute certain investments to ORCC III Financing pursuant to a Sale and Contribution Agreement by and between us and ORCC III Financing. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility I will be used to finance the origination and acquisition of eligible assets by ORCC III Financing, including the purchase of such assets from us. We retain a residual interest in assets contributed to or acquired by ORCC III Financing through our ownership of ORCC III Financing. The maximum principal amount of the SPV Asset Facility I is $625 million, which can be drawn in multiple currencies subject to certain conditions; the availability of this amount is subject to the borrowing base, which is determined on the basis of the value and types of ORCC III Financing’s assets from time to time, and

 

87

 

satisfaction of certain conditions, including certain concentration limits. The SPV Asset Facility I includes a $100 million sub-limit for swingline loans.

The SPV Asset Facility I provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility I through March 15, 2024, unless the commitments are terminated sooner as provided in the SPV Asset Facility I (the “Commitment Termination Date”). Unless otherwise terminated, the SPV Asset Facility I will mature on March 16, 2026 (the “SPV Asset Facility I Stated Maturity”). Prior to the SPV Asset Facility I Stated Maturity, proceeds received by ORCC III Financing from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. On the SPV Asset Facility I Stated Maturity, ORCC III Financing must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to us.

Amounts drawn in U.S. dollars bear interest at SOFR plus a spread of 2.30%; amounts drawn in Canadian dollars bear interest at CDOR plus a spread of 2.30%; amounts drawn in Euros bear interest at EURIBOR plus a spread of 2.30%; and amounts drawn in British pounds bear interest either at SONIA plus a spread of 2.2693% or at an alternate base rate plus a spread of 2.30%. From the SPV Asset Facility I Closing Date to the Commitment Termination Date, there is a commitment fee, calculated on a daily basis, ranging from 0.00% to 1.00% on the undrawn amount under the SPV Asset Facility I. The SPV Asset Facility I contains customary covenants, including certain limitations on the activities of ORCC III Financing, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility I is secured by a perfected first priority security interest in the assets of ORCC III Financing and on any payments received by ORCC III Financing in respect of those assets. Assets pledged to the lenders under the SPV Asset Facility I will not be available to pay our debts.

Borrowings of ORCC III Financing are considered our borrowings for purposes of complying with the asset coverage requirements under the 1940 Act.

SPV Asset Facility II

On December 2, 2021 (the “SPV Asset Facility II Closing Date”), ORCC III Financing II LLC (“ORCC III Financing II”), a Delaware limited liability company and newly formed subsidiary entered into a loan financing and servicing agreement (the “SPV Asset Facility II”), with ORCC III Financing II, as borrower, us, as equityholder and services provider, the lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as facility agent, State Street Bank and Trust Company, as collateral agent and Alter Domus (US) LLC, as collateral custodian. The parties to the SPV Asset Facility II have entered an amendment which converted the benchmark rate of the facility from LIBOR to term SOFR and added an additional lender and reallocated lender commitments. The following describes the terms of SPV Asset Facility II amended through February 18, 2022 (the “SPV Asset Facility II First Amendment Date”).

From time to time, we expect to sell and contribute certain loan assets to ORCC III Financing II pursuant to a Sale and Contribution Agreement by and between us and ORCC III Financing II. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility II will be used to finance the origination and acquisition of eligible assets by ORCC III Financing II, including the purchase of such assets from us. We retain a residual interest in assets contributed to or acquired by ORCC III Financing II through our ownership of ORCC III Financing II. The maximum principal amount of the SPV Asset Facility II is $350 million; the availability of this amount is subject to a borrowing base test, which is based on the value of ORCC III Financing II’s assets from time to time, and satisfaction of certain conditions, including interest spread and weighted average coupon tests, certain concentration limits and collateral quality tests.

The SPV Asset Facility II provides for the ability to borrow, reborrow, repay and prepay advances under the SPV Asset Facility II for a period of up to three years after the SPV Asset Facility II Closing Date unless such period is extended or accelerated under the terms of the SPV Asset Facility II (the “SPV Asset Facility II Revolving Period”). Unless otherwise extended, accelerated or terminated under the terms of the SPV Asset Facility II, the SPV Asset Facility II will mature on the date that is two years after the last day of the SPV Asset Facility II Revolving Period (the “SPV Asset Facility II Termination Date”). Prior to the SPV Asset Facility II Termination Date, proceeds received by ORCC III Financing II from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding advances, and the excess may be returned to the Company, subject to certain conditions. On the SPV Asset Facility II Termination Date, ORCC III Financing II must pay in full all outstanding fees and expenses and all principal and interest on outstanding advances, and the excess may be returned to us.

Amounts drawn bear interest at SOFR (or, in the case of certain lenders that are commercial paper conduits, the lower of (a) their cost of funds and (b) SOFR, such SOFR not to be lower than zero) plus a spread equal to 1.95% per annum, which spread will increase (a) on and after the end of the SPV Asset Facility II Revolving Period by 0.15% per annum if no event of default has occurred and (b) by 2.00% per annum upon the occurrence of an event of default (such spread, the “Applicable Margin”). SOFR may be replaced as a base rate under certain circumstances. During the SPV Asset Facility II Revolving Period, ORCC III Financing II will pay an undrawn fee ranging from 0.00% to 0.25% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility II. During the SPV Asset Facility II Revolving Period, if the undrawn commitments are in excess of a certain portion (initially 12.5% and increasing in stages to 25%, 50% and 70%) of the total commitments under the SPV Asset Facility II, ORCC III Financing II will also pay a make-whole fee equal to the Applicable Margin multiplied by such excess undrawn

 

88

 

commitment amount, reduced by the undrawn fee payable on such excess. ORCC III Financing II will also pay Deutsche Bank AG, New York Branch, certain fees (and reimburse certain expenses) in connection with its role as facility agent. The SPV Asset Facility II contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC III Financing II, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility II is secured by a perfected first priority security interest in the assets of ORCC III Financing II and on any payments received by ORCC III Financing II in respect of those assets. Assets pledged to the lenders will not be available to pay our debts.

Borrowings of ORCC III Financing II are considered our borrowings for purposes of complying with the asset coverage requirements under the 1940 Act.

Unsecured Notes

2027 Notes

On October 13, 2021, we issued $325 million aggregate principal amount of notes that mature on April 13, 2027 (the “2027 Notes”) in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and for initial resale to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act. The 2027 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The 2027 Notes initially bear interest at a rate of 3.125% per year, payable semi-annually on April 13 and October 13 of each year, commencing on April 13, 2022. Concurrent with the issuance of the 2027 Notes, we entered into a Registration Rights Agreement for the benefit of the purchasers of the 2027 Notes. Pursuant to the Registration Rights Agreement, we are obligated to file a registration statement with the SEC with respect to an offer to exchange the 2027 Notes for a new issue of debt securities registered under the Securities Act with terms substantially identical to those of the 2027 Notes (except for provisions relating to transfer restrictions and payment of additional interest) and to use our commercially reasonable efforts to consummate such exchange offer on the earliest practicable date after the registration statement has been declared effective but in no event later than 365 days after the initial issuance of the 2027 Notes. If we fail to satisfy our registration obligations under the Registration Rights Agreement, we will be required to pay additional interest to the holders of the 2027 Notes. We may redeem some or all of the 2027 Notes at any time, or from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of the 2027 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2027 Notes to be redeemed through March 13, 2027 (the date falling one month prior to the maturity date of the 2027 Notes), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2027 Notes on or after March 13, 2027 (the date falling one month prior to the maturity date of the 2027 Notes), the redemption price for the 2027 Notes will be equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Promissory Note

On September 13, 2021, we as borrower, entered into a Loan Agreement (the “FIC Agreement”) with Owl Rock Feeder FIC BDC III LLC (“Feeder FIC”), an affiliate of the Adviser, as lender, to enter into revolving promissory notes (the “Promissory Notes”) to borrow up to an aggregate of $250 million from Feeder FIC. On February 23, 2022, we entered into an amendment to the FIC Agreement to reduce the amount that can be borrowed pursuant to the Promissory Notes from $250 million to $150 million. We may re-borrow any amount repaid; however, there is no funding commitment between Feeder FIC and us.

The interest rate on amounts borrowed pursuant to the Promissory Notes, prior to February 23, 2022, was based on the lesser of the rate of interest for an ABR Loan or a Eurodollar Loan under the credit agreement dated as of April 15, 2021, as amended or supplemented from time to time, by and among the Adviser, as borrower, the several lenders from time to time party thereto, MUFG Union Bank, N.A., as Collateral Agent and MUFG Bank, Ltd., as Administrative Agent. The interest rate on amounts borrowed pursuant to the Promissory Notes after February 23, 2022 is based on the lesser of the rate of interest for a SOFR Loan or an ABR Loan under the Credit Agreement dated as of December 7, 2021, as amended or supplemented from time to time, by and among Blue Owl Finance LLC, as Borrower, Blue Owl Capital Holdings LP and Blue Owl Capital Carry LP as Parent Guarantors, the Subsidiary Guarantors party thereto, Bank of America, N.A., as Syndication Agent, JPMorgan Chase Bank, N.A., Wells Fargo Bank, National Association and Sumitomo Mitsui Banking Corporation, as Co-Documentation Agents and MUFG Bank, Ltd., as Administrative Agent.

The unpaid principal balance of any Promissory Note and accrued interest thereon is payable by us from time to time at our discretion but immediately due and payable upon 120 days written notice by Feeder FIC, and in any event due and payable in full no later than February 28, 2023. We intend to use the borrowed funds to make investments in portfolio companies consistent with our investment strategies.

 

 

89

 

Off-Balance Sheet Arrangements

Portfolio Company Commitments

From time to time, we may enter into commitments to fund investments. As of March 31, 2022 and December 31, 2021, we had the following outstanding commitments to fund investments in current portfolio companies:

Portfolio Company

 

Investment

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

ABB/Con-cise Optical Group LLC

 

First lien senior secured revolving loan

 

$

59

 

 

$

-

 

 

Alera Group, Inc.

 

First lien senior secured delayed draw term loan

 

 

677

 

 

 

677

 

 

Apex Group Treasury LLC

 

Second lien senior secured delayed draw term loan

 

 

6,617

 

 

 

6,617

 

 

Ardonagh Midco 3 PLC

 

First lien senior secured delayed draw term loan

 

 

231

 

 

 

237

 

 

Ascend Buyer, LLC (dba PPC Flexible Packaging)

 

First lien senior secured revolving loan

 

 

4,255

 

 

 

4,255

 

 

Associations, Inc.

 

First lien senior secured revolving loan

 

 

5,315

 

 

 

5,315

 

 

AxiomSL Group, Inc.

 

First lien senior secured delayed draw term loan

 

 

1,834

 

 

 

1,834

 

 

AxiomSL Group, Inc.

 

First lien senior secured revolving loan

 

 

4,003

 

 

 

4,003

 

 

Bayshore Intermediate #2, L.P. (dba Boomi)

 

First lien senior secured revolving loan

 

 

1,593

 

 

 

1,593

 

 

BCPE Osprey Buyer, Inc. (dba PartsSource)

 

First lien senior secured delayed draw term loan

 

 

13,340

 

 

 

13,340

 

 

BCPE Osprey Buyer, Inc. (dba PartsSource)

 

First lien senior secured revolving loan

 

 

5,645

 

 

 

5,645

 

 

BCTO BSI Buyer, Inc. (dba Buildertrend)

 

First lien senior secured revolving loan

 

 

444

 

 

 

444

 

 

BP Veraison Buyer, LLC (dba Sun World)

 

First lien senior secured delayed draw term loan

 

 

14,865

 

 

 

14,865

 

 

BP Veraison Buyer, LLC (dba Sun World)

 

First lien senior secured revolving loan

 

 

4,459

 

 

 

4,459

 

 

Brightway Holdings, LLC

 

First lien senior secured revolving loan

 

 

2,105

 

 

 

2,105

 

 

CFS Brands, LLC

 

First lien senior secured delayed draw term loan

 

 

567

 

 

 

-

 

 

CivicPlus, LLC

 

First lien senior secured delayed draw term loan

 

 

4,400

 

 

 

4,400

 

 

CivicPlus, LLC

 

First lien senior secured revolving loan

 

 

880

 

 

 

880

 

 

CSC MKG Topco LLC. (dba Medical Knowledge Group)

 

First lien senior secured revolving loan

 

 

112

 

 

 

-

 

 

Denali Buyerco LLC (dba Summit Companies)

 

First lien senior secured delayed draw term loan

 

 

16,843

 

 

 

18,980

 

 

Denali Buyerco LLC (dba Summit Companies)

 

First lien senior secured revolving loan

 

 

4,459

 

 

 

6,852

 

 

Diamondback Acquisition, Inc. (dba Sphera)

 

First lien senior secured delayed draw term loan

 

 

9,553

 

 

 

9,553

 

 

Dodge Data & Analytics LLC

 

First lien senior secured revolving loan

 

 

-

 

 

 

374

 

 

EET Buyer, Inc. (dba e-Emphasys)

 

First lien senior secured revolving loan

 

 

1,955

 

 

 

1,955

 

 

Evolution BuyerCo, Inc. (dba SIAA)

 

First lien senior secured revolving loan

 

 

2,230

 

 

 

2,230

 

 

Forescout Technologies, Inc.

 

First lien senior secured revolving loan

 

 

2,288

 

 

 

2,288

 

 

Fortis Solutions Group, LLC

 

First lien senior secured delayed draw term loan

 

 

9,183

 

 

 

9,183

 

 

Fortis Solutions Group, LLC

 

First lien senior secured revolving loan

 

 

3,148

 

 

 

3,148

 

 

Gainsight, Inc.

 

First lien senior secured revolving loan

 

 

872

 

 

 

872

 

 

Gaylord Chemical Company, L.L.C.

 

First lien senior secured revolving loan

 

 

3,973

 

 

 

3,973

 

 

GI Ranger Intermediate, LLC (dba Rectangle Health)

 

First lien senior secured delayed draw term loan

 

 

-

 

 

 

2,789

 

 

GI Ranger Intermediate, LLC (dba Rectangle Health)

 

First lien senior secured revolving loan

 

 

1,506

 

 

 

1,673

 

 

 

 

 

90

 

Portfolio Company

 

Investment

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

Global Music Rights, LLC

 

First lien senior secured revolving loan

 

 

7,500

 

 

 

7,500

 

 

GovBrands Intermediate, Inc.

 

First lien senior secured delayed draw term loan

 

 

870

 

 

 

870

 

 

GovBrands Intermediate, Inc.

 

First lien senior secured revolving loan

 

 

881

 

 

 

881

 

 

Granicus, Inc.

 

First lien senior secured delayed draw term loan

 

 

1,006

 

 

 

1,006

 

 

Granicus, Inc.

 

First lien senior secured revolving loan

 

 

1,187

 

 

 

1,187

 

 

GS Acquisitionco, Inc. (dba insightsoftware)

 

First lien senior secured delayed draw term loan

 

 

5,081

 

 

 

5,081

 

 

Guidehouse Inc.

 

First lien senior secured revolving loan

 

 

-

 

 

 

3,356

 

 

Hercules Borrower LLC (dba The Vincit Group)

 

First lien senior secured delayed draw term loan

 

 

2,183

 

 

 

3,693

 

 

Hercules Borrower LLC (dba The Vincit Group)

 

First lien senior secured revolving loan

 

 

3,839

 

 

 

4,298

 

 

IG Investments Holdings, LLC (dba Insight Global)

 

First lien senior secured revolving loan

 

 

4,335

 

 

 

2,710

 

 

Individual Foodservice Holdings, LLC

 

First lien senior secured delayed draw term loan

 

 

-

 

 

 

15,723

 

 

Individual Foodservice Holdings, LLC

 

First lien senior secured revolving loan

 

 

2,055

 

 

 

2,387

 

 

Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)

 

First lien senior secured delayed draw term loan

 

 

7,400

 

 

 

-

 

 

Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)

 

First lien senior secured delayed draw term loan

 

 

7,400

 

 

 

-

 

 

Inovalon Holdings, Inc.

 

First lien senior secured delayed draw term loan

 

 

5,399

 

 

 

5,399

 

 

Intelerad Medical Systems Incorporated

 

First lien senior secured revolving loan

 

 

594

 

 

 

594

 

 

Interoperability Bidco, Inc. (dba Lyniate)

 

First lien senior secured revolving loan

 

 

217

 

 

 

-

 

 

KBP Brands, LLC

 

First lien senior secured delayed draw term loan

 

 

74

 

 

 

-

 

 

KPSKY Acquisition, Inc. (dba BluSky)

 

First lien senior secured delayed draw term loan

 

 

2,051

 

 

 

2,051

 

 

Lignetics Investment Corp.

 

First lien senior secured delayed draw term loan

 

 

6,373

 

 

 

6,373

 

 

Lignetics Investment Corp.

 

First lien senior secured revolving loan

 

 

5,480

 

 

 

6,373

 

 

Medline Borrower, LP

 

First lien senior secured revolving loan

 

 

1,847

 

 

 

1,847

 

 

MHE Intermediate Holdings, LLC (dba OnPoint Group)

 

First lien senior secured delayed draw term loan

 

 

2,264

 

 

 

2,264

 

 

MHE Intermediate Holdings, LLC (dba OnPoint Group)

 

First lien senior secured revolving loan

 

 

3,430

 

 

 

3,571

 

 

Milan Laser Holdings LLC

 

First lien senior secured revolving loan

 

 

3,529

 

 

 

3,529

 

 

Ministry Brands Holdings, LLC.

 

First lien senior secured delayed draw term loan

 

 

3,362

 

 

 

3,362

 

 

Ministry Brands Holdings, LLC.

 

First lien senior secured revolving loan

 

 

1,008

 

 

 

1,008

 

 

National Dentex Labs LLC (fka Barracuda Dental LLC)

 

First lien senior secured delayed draw term loan

 

 

663

 

 

 

663

 

 

National Dentex Labs LLC (fka Barracuda Dental LLC)

 

First lien senior secured revolving loan

 

 

430

 

 

 

1,054

 

 

Natural Partners, LLC

 

First lien senior secured revolving loan

 

 

170

 

 

 

-

 

 

NMI Acquisitionco, Inc. (dba Network Merchants)

 

First lien senior secured delayed draw term loan

 

 

1,375

 

 

 

1,375

 

 

NMI Acquisitionco, Inc. (dba Network Merchants)

 

First lien senior secured revolving loan

 

 

558

 

 

 

558

 

 

Notorious Topco, LLC (dba Beauty Industry Group)

 

First lien senior secured delayed draw term loan

 

 

8,803

 

 

 

8,803

 

 

Notorious Topco, LLC (dba Beauty Industry Group)

 

First lien senior secured revolving loan

 

 

3,873

 

 

 

4,401

 

 

 

 

91

 

 

Portfolio Company

 

Investment

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

OB Hospitalist Group, Inc.

 

First lien senior secured revolving loan

 

 

6,851

 

 

 

6,120

 

 

Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.)

 

First lien senior secured revolving loan

 

 

2,654

 

 

 

2,654

 

 

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)

 

First lien senior secured delayed draw term loan

 

 

-

 

 

 

2,190

 

 

Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)

 

First lien senior secured revolving loan

 

 

1,552

 

 

 

1,552

 

 

Pluralsight, LLC

 

First lien senior secured revolving loan

 

 

1,294

 

 

 

1,294

 

 

QAD Inc.

 

First lien senior secured revolving loan

 

 

6,000

 

 

 

6,000

 

 

Quva Pharma, Inc.

 

First lien senior secured revolving loan

 

 

851

 

 

 

1,182

 

 

Refresh Parent Holdings, Inc.

 

First lien senior secured delayed draw term loan

 

 

-

 

 

 

133

 

 

Refresh Parent Holdings, Inc.

 

First lien senior secured revolving loan

 

 

-

 

 

 

1,149

 

 

Relativity ODA LLC

 

First lien senior secured revolving loan

 

 

1,480

 

 

 

1,480

 

 

Smarsh Inc.

 

First lien senior secured delayed draw term loan

 

 

190

 

 

 

-

 

 

Smarsh Inc.

 

First lien senior secured revolving loan

 

 

48

 

 

 

-

 

 

Sonny's Enterprises LLC

 

First lien senior secured revolving loan

 

 

3,945

 

 

 

3,381

 

 

SWK BUYER, Inc. (dba Stonewall Kitchen)

 

First lien senior secured delayed draw term loan

 

 

175

 

 

 

-

 

 

SWK BUYER, Inc. (dba Stonewall Kitchen)

 

First lien senior secured revolving loan

 

 

63

 

 

 

-

 

 

Tahoe Finco, LLC

 

First lien senior secured revolving loan

 

 

6,279

 

 

 

6,279

 

 

Tamarack Intermediate, L.L.C. (dba Verisk 3E)

 

First lien senior secured revolving loan

 

 

112

 

 

 

-

 

 

TEMPO BUYER CORP. (dba Global Claims Services)

 

First lien senior secured delayed draw term loan

 

 

10,317

 

 

 

10,317

 

 

TEMPO BUYER CORP. (dba Global Claims Services)

 

First lien senior secured revolving loan

 

 

4,952

 

 

 

5,159

 

 

The Shade Store, LLC

 

First lien senior secured revolving loan

 

 

2,955

 

 

 

5,909

 

 

Thunder Purchaser, Inc. (dba Vector Solutions)

 

First lien senior secured delayed draw term loan

 

 

6,124

 

 

 

6,124

 

 

Thunder Purchaser, Inc. (dba Vector Solutions)

 

First lien senior secured revolving loan

 

 

1,776

 

 

 

2,143

 

 

Troon Golf, L.L.C.

 

First lien senior secured revolving loan

 

 

4,392

 

 

 

5,405

 

 

Ultimate Baked Goods Midco, LLC

 

First lien senior secured revolving loan

 

 

750

 

 

 

950

 

 

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)

 

First lien senior secured revolving loan

 

 

1,078

 

 

 

1,078

 

 

Velocity HoldCo III Inc. (dba VelocityEHS)

 

First lien senior secured revolving loan

 

 

368

 

 

 

368

 

 

When I Work, Inc.

 

First lien senior secured revolving loan

 

 

4,164

 

 

 

4,164

 

 

Total Unfunded Portfolio Company Commitments

 

 

 

$

291,018

 

 

$

311,487

 

 

We seek to carefully consider our unfunded portfolio company commitments for the purpose of planning our ongoing financial leverage. Further, we consider any outstanding unfunded portfolio company commitments we are required to fund within the 150% asset coverage limitation. As of March 31, 2022, we believed we had adequate financial resources to satisfy the unfunded portfolio company commitments.

 

Investor Commitments

As of March 31, 2022, we had approximately $1.7 billion in total Capital Commitments from investors (approximately $50.1 million undrawn), of which $62.4 million is from entities affiliated with or related to the Adviser. These undrawn Capital Commitments will no longer remain in effect following the completion of a Liquidity Event.

As of December 31, 2021, we had approximately $1.7 billion in total Capital Commitments from investors (approximately $48.6 million undrawn), of which $62.4 million is from entities affiliated with or related to the Adviser. These undrawn Capital Commitments will no longer remain in effect following the completion of a Liquidity Event.

Other Commitments and Contingencies

 

92

 

From time to time, we may become a party to certain legal proceedings incidental to the normal course of our business. At March 31, 2022, we were not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

Contractual Obligations

A summary of our contractual payment obligations under our credit facilities as of March 31, 2022 is as follows:

 

 

 

Payments Due by Period

 

($ in millions)

 

Total

 

 

Less than 1 year

 

 

1-3 years

 

 

3-5 years

 

 

After 5 years

 

Revolving Credit Facility

 

 

160.2

 

 

 

-

 

 

 

-

 

 

 

160.2

 

 

 

-

 

SPV Asset Facility I

 

 

575.0

 

 

 

-

 

 

 

-

 

 

 

575.0

 

 

 

-

 

SPV Asset Facility II

 

 

230.0

 

 

 

-

 

 

 

-

 

 

 

230.0

 

 

 

-

 

2027 Notes

 

 

325.0

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

325.0

 

Promissory Note

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total Contractual Obligations

 

$

1,290.2

 

 

$

-

 

 

$

-

 

 

$

965.2

 

 

$

325.0

 

 

Related-Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

•
the Investment Advisory Agreement;
•
the Administration Agreement;
•
the Dealer Manager Agreement;
•
the Placement Agent Agreement; and
•
the License Agreement.

In addition to the aforementioned agreements, we rely on exemptive relief that has been granted to ORCA and certain of its affiliates to permit us to co-invest with other funds managed by the Adviser or its affiliates in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. See “ITEM 1. – Notes to Consolidated Financial Statements – Note 3. Agreements and Related Party Transactions” for further details.

 

Critical Accounting Policies

The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies should be read in connection with our risk factors as described in our Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022, and in “ITEM 1A. RISK FACTORS.”

 

Investments at Fair Value

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of our investments, are valued at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our audit committee and independent third-party valuation firm(s) engaged at the direction of the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which

 

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similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:

•
With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;
•
With respect to investments for which market quotations are not readily available, the valuation process begins with the independent valuation firm(s) providing a preliminary valuation of each investment to the Adviser’s valuation committee;
•
Preliminary valuation conclusions are documented and discussed with the Adviser’s valuation committee. Agreed upon valuation recommendations are presented to the Audit Committee;
•
The Audit Committee reviews the valuation recommendations and recommends values for each investment to the Board; and
•
The Board reviews the recommended valuations and determines the fair value of each investment.

We conduct this valuation process on a quarterly basis.

We apply Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, we consider its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:

•
Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.
•
Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
•
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Transfers between levels, if any, are recognized at the beginning of the period in which the transfer occurred. In addition to using the above inputs in investment valuations, we apply the valuation policy approved by our Board that is consistent with ASC 820. Consistent with the valuation policy, we evaluate the source of the inputs, including any markets in which our investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), we subject those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, we, or the independent valuation firm(s), review pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.

Rule 2a-5 under the 1940 Act was recently adopted by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act. We intend to comply with the new rule’s requirements on or before the compliance date in September 2022.

Interest and Dividend Income Recognition

Interest income is recorded on the accrual basis and includes amortization of discounts or premiums. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK interest or dividends represent accrued interest or dividends that are added to the principal amount of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or at the occurrence of a liquidation event. Discounts and premiums to par value on securities

 

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purchased are amortized into interest income over the contractual life of the respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the amortization of discounts or premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. If at any point we believe PIK interest is not expected to be realized, the investment generating PIK interest will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest income. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

Distributions

We have elected to be treated for U.S. federal income tax purposes, and qualify annually thereafter, as a RIC under Subchapter M of the Code. To obtain and maintain our tax treatment as a RIC, we must distribute (or be deemed to distribute) in each taxable year distribution for tax purposes equal to at least 90 percent of the sum of our:

•
investment company taxable income (which is generally our ordinary income plus the excess of realized short-term capital gains over realized net long-term capital losses), determined without regard to the deduction for dividends paid, for such taxable year; and
•
net tax-exempt interest income (which is the excess of our gross tax-exempt interest income over certain disallowed deductions) for such taxable year.

As a RIC, we (but not our shareholders) generally will not be subject to U.S. federal tax on investment company taxable income and net capital gains that we distribute to our shareholders.

We intend to distribute annually all or substantially all of such income. To the extent that we retain our net capital gains or any investment company taxable income, we generally will be subject to corporate-level U.S. federal income tax. We can be expected to carry forward our net capital gains or any investment company taxable income in excess of current year dividend distributions, and pay the U.S. federal excise tax as described below.

Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% U.S. federal excise tax payable by us. We may be subject to a nondeductible 4% U.S. federal excise tax if we do not distribute (or are treated as distributing) during each calendar year an amount at least equal to the sum of:

•
98% of our net ordinary income excluding certain ordinary gains or losses for that calendar year;
•
98.2% of our capital gain net income, adjusted for certain ordinary gains and losses, recognized for the twelve-month period ending on October 31 of that calendar year; and
•
100% of any income or gains recognized, but not distributed, in preceding years.

While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed and as a result, in such cases, the excise tax will be imposed. In such an event, we will be liable for this tax only on the amount by which we do not meet the foregoing distribution requirement.

We intend to pay quarterly distributions to our shareholders out of assets legally available for distribution. All distributions will be paid at the discretion of our Board and will depend on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as our Board may deem relevant from time to time.

To the extent our current taxable earnings for a year fall below the total amount of our distributions for that year, a portion of those distributions may be deemed a return of capital to our shareholders for U.S. federal income tax purposes. Thus, the source of a distribution to our shareholders may be the original capital invested by the shareholder rather than our income or gains. Shareholders should read written disclosure carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common shareholders. As a result, if we declare a cash dividend or other distribution, each shareholder that has not “opted out” of our dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of our common stock rather than receiving cash distributions. Shareholders

 

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who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

Income Taxes

We have elected to be treated as a BDC under the 1940 Act. We also have elected to be treated as a RIC under the Code beginning with the taxable year ending December 31, 2020 and intend to continue to qualify as a RIC. So long as we maintain our tax treatment as a RIC, we generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute at least annually to our shareholders as distributions. Rather, any tax liability related to income earned and distributed by us represents obligations of our investors and will not be reflected in our consolidated financial statements.

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, we must distribute to our shareholders, for each taxable year, at least 90% of our “investment company taxable income” for that year, which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses. In order for us to not be subject to U.S. federal excise taxes, we must distribute annually an amount at least equal to the sum of (i) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. We, at our discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income.

We evaluate tax positions taken or expected to be taken in the course of preparing our consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. There were no material uncertain tax positions through December 31, 2021. The 2020 tax year remains subject to examination by U.S. federal, state and local tax authorities.

 

Recent Developments

On May 3, 2022, the Board declared a distribution of 90% of estimated second quarter taxable income and net capital gains, if any, for shareholders of record on June 30, 2022, payable on or before August 15, 2022.

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to financial market risks, including valuation risk and interest rate risk.

Valuation Risk

We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of private companies. Most of our investments will not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our Audit Committee and independent third-party valuation firm(s) engaged at the direction of the Board, and in accordance with our valuation policy. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.

Interest Rate Risk

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. We intend to fund portions of our investments with borrowings, and at such time, our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow. Accordingly, we cannot assure you that a significant change in market interest rates will not have a material adverse effect on our net investment income.

In a prolonged low interest rate environment, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net income and potentially adversely affecting our operating results. Conversely, in a rising interest rate environment, such difference could potentially increase thereby increasing our net income as indicated per the table below.

Substantially all of our assets and liabilities are financial in nature. As a result, changes in interest rates and other factors drive our performance more directly than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates.

As of March 31, 2022, 98.8% of our debt investments based on fair value were at floating rates. Additionally, the weighted average LIBOR floor, based on fair value, of our debt investments was 0.8%.

Based on our Consolidated Statements of Assets and Liabilities as of March 31, 2022, the following table shows the annualized impact on net income of hypothetical base rate changes in interest rates on our debt investments (considering interest rate floors for floating rate instruments) assuming each floating rate investment is subject to 3-month LIBOR and there are no changes in our investment and borrowing structure:

 

($ in thousands)

 

Interest Income

 

 

Interest Expense

 

 

Net Income

 

Up 300 basis points

 

$

83,010

 

 

$

28,957

 

 

$

54,053

 

Up 200 basis points

 

$

55,197

 

 

$

19,305

 

 

$

35,892

 

Up 100 basis points

 

$

27,385

 

 

$

9,652

 

 

$

17,733

 

Up 50 basis points

 

$

13,479

 

 

$

4,826

 

 

$

8,653

 

Down 50 basis points

 

$

(4,515

)

 

$

(4,826

)

 

$

311

 

Down 100 basis points

 

$

(4,761

)

 

$

(9,281

)

 

$

4,520

 

We may in the future hedge against interest rate fluctuations by using hedging instruments such as interest rate swaps, futures, options, and forward contracts. While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio investments.

We have material contracts that are indexed to USD-LIBOR and are monitoring this activity, evaluating the related risks and our exposure, and adding alternative language to contracts, where necessary. Certain contracts have an orderly market transition already in process. However, it is not possible to predict the effect of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for LIBOR-based financial instruments.

Currency Risk

From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at each balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates. We also have the ability to borrow in certain foreign currencies under our credit

 

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facilities. Instead of entering into a foreign currency forward contract in connection with loans or other investments we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment. To the extent the loan or investment is based on a floating rate other than a rate under which we can borrow under our credit facilities, we may seek to utilize interest rate derivatives to hedge our exposure to changes in the associated rate.

 

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Item 4. Controls and Procedures

(a)
Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective as of the end of the period covered by the Quarterly Report on Form 10-Q.

(b)
Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any such future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “ITEM 1A. RISK FACTORS” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 are not the only risks facing us. Additionally risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

 

Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations.

The current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide.

For example, the COVID-19 pandemic continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets.

In addition, the rising conflict between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. In response to the conflict between Russia and Ukraine, the U.S. and other countries have imposed sanctions or other restrictive actions against Russia. The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally and could have a material adverse effect on our portfolio companies and our business, financial condition, cash flows and results of operations. The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict. In addition, sanctions could also result in Russia taking counter measures or retaliatory actions which could adversely impact our business or the business of our portfolio companies, including, but not limited to, cyberattacks targeting private companies, individuals or other infrastructure upon which our business and the business of our portfolio companies rely.

Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.

 

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Other than the shares issued pursuant to our dividend reinvestment plan, we did not sell any unregistered equity securities, except as previously disclosed in certain 8-Ks filed with the SEC.

On January 31, 2022, pursuant to our dividend reinvestment plan, we issued 382,099 shares of our common stock, at a price of $15.05 per share, to stockholders of record as of December 31, 2021 that did not opt out of our dividend reinvestment plan in order to satisfy the reinvestment portion of our dividends. This issuance was not subject to the registration requirements of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Executive Officers

On May 3, 2022, the Board, appointed Jennifer McMillon to serve as the Company's Co-Chief Accounting Officer, Co-Treasurer and Co-Controller.

Ms. McMillon is a Managing Director of Blue Owl and also serves as the Co-Chief Accounting officer of the Company, ORCC II, ORCIC and ORTIC and as the Co-Treasurer and Co-Controller of each of the Owl Rock BDCs. Before joining Blue Owl, Ms. McMillon led the accounting department of Tiptree Inc. (TIPT), a national capital holding company, as the Vice President of Technical Accounting and External Reporting from 2017-2022. She was responsible for financial reporting, valuation/purchase accounting, and numerous internal control functions. From 2013-2017, Ms. McMillon served as the Regional Accounting & Reporting Director, Americas of Koch Industries/Georgia Pacific, from 2009-2013 she served as an Accounting Manager at Oaktree Capital and Centerbridge Partners, and prior to that Ms. McMillon worked in public accounting for nearly ten years, spending most of this tenure at PricewaterhouseCoopers. Ms. McMillon earned her B.S. in Accounting from Florida State University and is a licensed Certified Public Accountant in New York.

 

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Item 6. Exhibits

 

 

 

 

Exhibit

Number

 

Description of Exhibits

 

 

 

3.1

 

Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form 10 filed on June 5, 2020).

3.2

 

Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form 10 filed on June 5, 2020).

10.1

 

Amendment No. 1 to Loan Financing and Servicing Agreement, dated as of February 18, 2022, among ORCC III Financing II LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent, Owl Rock Capital Corporation III as equityholder and as services provider and Deutsche Bank AG, New York Branch as an agent and as a committed lender (incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K, filed February 24, 2022).

 

10.2

 

Amendment No. 3 to Loan and Servicing Agreement, dated as of March 16, 2022, by and among ORCC III Financing LLC, as Borrower, Owl Rock Capital Corporation III as Equityholder, Owl Rock Diversified Advisors, LLC, as Collateral Manager, the Lenders from time to time parties thereto, Société Générale, as Agent, the other Lender Agents parties thereto, State Street Bank and Trust Company, as Collateral Agent, and Alter Domus (US) LLC, as Collateral Custodian (incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K, filed March 22, 2022).

 

31.1*

 

 

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

31.2*

 

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1**

 

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2**

 

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

________________

* Filed herein.

**Furnished herein.

 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Owl Rock Capital Corporation III

 

 

 

 Date: May 6, 2022

By:

/s/ Craig W. Packer

 

 

Craig W. Packer

 

 

Chief Executive Officer

 

 

 

Owl Rock Capital Corporation III

 

 

 

 

Date: May 6, 2022

 

By:

/s/ Bryan Cole

 

 

 

Bryan Cole

 

 

 

Chief Financial Officer and Chief Operating Officer

 

 

103